What would be the effect on Galaxy annual net income

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Question - Industry manufactures and sells 15,000 components per year as one part of its production activities. The annual costs to manufacture the part are as follows:

Direct materials $150,000

Direct labor $200,000

Variable manufacturing overhead $90,000

Fixed manufacturing overhead (allocated) $72,000

Fixed manufacturing costs (unique to part) $48,000

Total $560,000

Required - An outside supplier has offered to sell the component to Galaxy for $34 each. If Galaxy purchases the component instead of manufacturing it, what would be the effect on Galaxy's annual net income?

Reference no: EM132765284

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