Question: Alpha currently makes a subassembly for its main product. The costs per unit are as follows: Direct materials $ 45.00 Direct labor 35.00 Variable overhead

Alpha currently makes a subassembly for its main product. The costs per unit are as follows: Direct materials $ 45.00 Direct labor 35.00 Variable overhead 33.00 Fixed overhead 30.00 Total $143.00 Vendor has contacted Alpha with an offer to sell 5,000 of the subassemblies for $135.00 each. Alpha will eliminate $85,000 of fixed overhead if it accepts the proposal. 25) Which option, make or buy, gives Alpha the higher operating income? By how much?

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