If Marigold accepts the offer, by how much will net income increase (decrease)?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Marigold Corp. incurs the following costs to produce 12200 units of a subcomponent:

Direct materials $10248
Direct labor 13786
Variable overhead 15372
Fixed overhead 16200


An outside supplier has offered to sell Marigold the subcomponent for $2.85 a unit. No fixed overhead costs are avoidable.

If Marigold accepts the offer, by how much will net income increase (decrease)?

$(3538)
$20836
$4636
$(10736)
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