Olive Corp

question 136

Multiple Choice

Olive Corp.currently makes 20,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Olive Corp.with the 20,000 subcomponents at a $36 per unit price.Fixed overhead is not avoidable.If Olive Corp.accepts the outside offer,what will be the effect on short-term profits?

• A)$160,000 decrease
• B)$320,000 increase
• C)$160,000 increase
• D)$80,000 decrease

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