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Emery Products is deciding whether to outsource the production of a certain component that is included in all of its products.It currently costs Emery Products $1.20 to make each component in-house.If Emery Products outsources,it can buy the component ready-made for $0.90 each and can shut down the production facilities it is currently using to manufacture the component and save $20,000 a year in fixed costs.Annual requirement for the component is 12,000 units.What is the effect of outsourcing?
Budgeted Balance Sheet
A financial statement that projects the financial position of a company at a future date, based on budgeted transactions.
Schedule of Cash Receipts
A detailed plan or report of the expected times and amounts of incoming cash to the business.
Gross Profit Rate
The ratio of gross profit to net sales, showing the percentage of revenue that exceeds the cost of goods sold.
Inventory
Materials and goods on hand that a business plans to sell in the regular course of operations, representing a current asset on the balance sheet.
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