Xon Company Needs 1,000 Components for One of Its Products

question 25

Multiple Choice

Xon Company needs 1,000 components for one of its products. It can subcontract production of the components to the Eon Company for $40 each. Xon Company can produce the components internally for a total variable cost of $30 per component and has spare capacity. What will be the impact on Xon's profit if Eon's offer is accepted?

• A) $1,000 decrease
• B) $10,000 decrease
• C) $1,000 increase
• D) $10,000 increase

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Definitions:

Alternation of Generations

A reproductive cycle found in plants and some algae involving successive asexual and sexual generations.

Cytomixis

The migration of cellular contents, including chromosomes, from one cell to another through cytoplasmic bridges, observed in plant cells.

Apomixis

A type of reproduction in which fruits and seeds are formed asexually.

Septa

Dividing walls or partitions between tissues or spaces in an organism, often found in the heart, fungi, and other structures.