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CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products: A supplier has offered to provide the component to CM manufacturing for $500 per unit. If CM Manufacturing were to buy the component from the supplier, they could use the released facilities to manufacture a product which would generate contribution margin of $16,000 annually. Assuming that CM Manufacturing needs 2,000 components annually and the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if the company outsources?
Imposing Will
The act of enforcing one's desires or decisions upon others, often disregarding their consent or preferences.
Industrial Revolution
A period of major industrialization that took place during the late 1700s and early 1800s, transforming economies, societies, and manufacturing processes.
Migration Movement
The process of movement by people from one place to another with the intentions of settling, permanently or temporarily, at a new location.
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