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What will be the short run impact on income

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Reference no: EM131750657

Problem - Switze Corporation makes motorcycle engines. The company's recors show the following unit costs to manufacture part# 61645

Direct materials              $12.00

Direct labor                    $15.00

Variable overhead           $20.00

Fixed overhead               $10.00

Another manufacturer has offered to supply Switzer Corporation with part# 61645 for a cost of $50 per unit. Switzer uses 1,000 units annually.

If Switzer accept the offer, what will be the short run impact on income?

Reference no: EM131750657

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