Chetek Industries Manufactures 15,000 Components Per Year

question 32

Multiple Choice

Chetek Industries manufactures 15,000 components per year.The manufacturing cost of the components was determined to be as follows: Assume Chetek Industries could avoid $40,000 of fixed manufacturing overhead if it purchases the component from an outside supplier.An outside supplier has offered to sell the component for $34.If Chetek purchases the component from the supplier instead of manufacturing it,the effect on income would be a

• A)$60,000 increase
• B)$10,000 increase
• C)$100,000 decrease
• D)$140,000 increase

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Definitions:

Sales Career

A professional path focused on the activity of selling products or services, often involving direct interaction with customers and meeting sales targets.

Self-Employed

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