Switzer Corporation makes motorcycle engines. The companys records show the following unit costs to manufacture part #61645:

Question:

Switzer makes motorcycle engines. The company’s records show the following unit costs to manufacture part #61645:
Direct materials ......... $12
Direct labor ......... $15
Variable overhead ........ $20
Fixed overhead ......... $10
Another manufacturer has offered to supply Switzer with part #61645 for a cost of $50 per unit. Switzer uses 1,000 units annually.

Required
If Switzer accepts the offer, what will be the short-run impact on income?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...