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What the annual impact on Brown net operating income

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Reference no: EM132861864

Question - Brown Company produces 2,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:

Variable manufacturing cost $24

Fixed manufacturing cost 18

Unit product cost $42

The part can be purchased from an outside supplier at $40 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. What the annual impact on Brown's net operating income as a result of buying the part from the outside supplier?

Reference no: EM132861864

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