Your Company produces batteries which are used in the production of their riding tractors. The costs to produce 25,000 batteries annually are as follows: Direct material Direct labor Variable overhead Fixed overhead Total $ 125,000 720,000 75,000 175,000 $1,095.000 An outside supplier has offered to sell Cloverleaf similar batteries for $40 per batteries. If they are purchased from the outside supplier, 40% of annual fixed factory overhead could be avoided. If Your Company decides to buy the battery, what is the change in net income net operating income? O A. $25,000 O B. ($25,000) OC. ($10,000) O D. $10,000

Your Company produces batteries which are used in the production of their riding tractors. The costs to produce 25,000 batteries annually are as follows: Direct material Direct labor Variable overhead Fixed overhead Total $ 125,000 720,000 75,000 175,000 $1,095.000 An outside supplier has offered to sell Cloverleaf similar batteries for $40 per batteries. If they are purchased from the outside supplier, 40% of annual fixed factory overhead could be avoided. If Your Company decides to buy the battery, what is the change in net income net operating income? O A. $25,000 O B. ($25,000) OC. ($10,000) O D. $10,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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