Olive Corp

question 28

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.rejects the outside offer,what will be the effect on short-term profits?

• A)$80,000 increase
• B)no change
• C)$160,000 decrease
• D)$80,000 decrease

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Definitions:

Compensation

A psychological strategy or an organizational policy of providing benefits, often monetary, in exchange for work or to make up for a deficiency or injury.

Minimize

To reduce to the smallest possible amount or degree; to make something appear less important or significant.

Maximize

To increase something to its highest possible value or level.

Professional Activities

Work-related tasks or duties performed by an individual in their career or occupation.