Answer:
Net operating income would decrease by $36,000 per year.
Explanation:
The company's current cost of manufacturing a part Z95 is $33.9 which includes all the material, labor and overhead costs. If the company buys this part from an outside supplier it will cost $24.10 each. but the depreciation and factory overhead cannot be avoided. The depreciation is $5.40 and factory overheads are $8.60. This will be added to the cost of buying each part.
$24.10 + $5.40 + $8.60 = $38.1
The cost of buying the part is greater than the cost of making it.
Answer:
independent contractor
Explanation:
The IRS uses the following 3 criteria to determine if a worker is an employee or not:
- Behavioral: does the employer control what the worker does? if +, employee
- Financial: does the employer have control over how and what amount a worker is paid? if +, employee
- Type of Relationship: Does the worker have any written contract or any does he/she receive any type of benefits? Does the relationship between the employer and the worker permanent? If +, employee
Apparently Patrick would fit quite well into the criteria of being an employee, but since he has a written agreement that states that he is an independent contractor, then that is how he should be classified. Also, it must be considered how Patrick pays his taxes, but we were not given that information.
Some states use a more strict parameter to determine if a worker is an employee, but that is not the case here.
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