Use the Following Information for Questions
Clemente Inc An Outside Supplier Has Offered to Sell Clemente the Subcomponent

question 82

Multiple Choice

Use the following information for questions
Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: $$\begin{array} { l l } \text { Direct materials } & \$ 8,400 \\\text { Direct labor } & 11,250 \\\text { Variable overhead } & 12,600 \\\text { Fixed overhead } & 16,200\end{array}$$ An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit.
-If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by

• A) $750.
• B) $(5,850).
• C) $(3,150).
• D) $6,750.

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Definitions:

Annual Dividend

The total dividend payments made to shareholders in a year, typically expressed per share.

Rate of Return

The enhancement or reduction in worth of an investment across a specific duration, measured as a proportion of the investment's original cost.

First Dividends

The initial distribution of earnings paid to shareholders by a corporation that has just begun paying dividends.