If Marigold accepts the offer, by how much will net income increase (decrease)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Marigold Corp. incurs the following costs to produce 12200 units of a subcomponent:
Direct materials | $10248 |
Direct labor | 13786 |
Variable |
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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