Cotton Corp

question 44

Multiple Choice

Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at an $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp.accepts the outside offer,what will be the effect on short-term profits?

• A)$260,000 increase
• B)$195,000 decrease
• C)no change
• D)$65,000 increase

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