Figure 9-1
Foster Industries Manufactures 20,000 Components Per Year An Outside Supplier Has Offered to Sell the Component for Manufacturing

question 67

Multiple Choice

Figure 9-1
Foster Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows: $\begin{array}{lr}\text { Direct materials } & £ 150,000 \\\text { Direct labour } & 240,000 \\\text { Variable manufacturing overhead } & 90,000 \\\text { Fixed manufacturing overhead } & -120,000 \\\text { Total } & £ 600,000\end{array}$ An outside supplier has offered to sell the component for £25.50.
-Refer to Figure 9-1. What is the effect on income if Foster Industries purchases the component from the outside supplier?

• A)£30,000 decrease
• B)£30,000 increase
• C)£90,000 decrease
• D)£90,000 increase

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Definitions:

Genetic Factors

Hereditary characteristics and traits influenced by genes passed down from parents to offspring, affecting physical and mental development.

Intelligence

The ability to learn from experience, solve problems, and use knowledge to adapt to new situations.

Identical

Exactly alike; having the same form, qualities, or characteristics.

Fraternal Twins

Siblings born at the same time as a result of two different eggs fertilized by separate sperm cells, sharing 50% of their DNA.