Concierge Industries Manufactures 40,000 Components Per Year An Outside Supplier Has Offered to Sell the Component for of the Components

question 35

Multiple Choice

Concierge Industries manufactures 40,000 components per year. The manufacturing cost of the components was determined as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 75,000 \\\text { Direct labor } & 120,000 \\\text { Variable manufacturing overhead } & 45,000 \\\text { Fixed manufacturing overhead } & 60,000 \\\text { Total } & \$ 300,000 \\\hline\end{array}$$ An outside supplier has offered to sell the component for $12.75.
Concierge Industries can rent its unused manufacturing facilities for $45,000 if it purchases the component from the outside supplier.
What is the effect on income if Concierge purchases the component from the outside supplier?

• A)$195,000 increase
• B)$165,000 decrease
• C)$225,000 decrease
• D)$135,000 increase

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Definitions:

Positive Relationship

A connection between two variables where they move in the same direction, indicating that as one variable increases, so does the other.

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Test-retest Reliability

The consistency of a measure or test over time, assessed by administering the test to the same participants at two different points in time.

Internal Consistency

A measure of the reliability of a psychological test or survey, reflecting the extent to which all parts of the test contribute to the same construct.