Use the Following Information for Questions
Ortiz Co If Ortiz Buys the Part from an Outside Supplier, $40,000

question 32

Multiple Choice

Use the following information for questions
Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production: $$\begin{array} { l r } \text { Direct materials } & \$ 55,000 \\\text { Direct labor } & 160,000 \\\text { Variable overhead } & 75,000 \\\text { Fixed overhead } & 175,000\end{array}$$ If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable.
-If the outside supplier offers a unit price of $68, net income will increase (decrease) by

• A) $(10,000).
• B) $125,000.
• C) $(50,000).
• D) $85,000.

---

Definitions:

Diabetes

A long-term medical condition where blood sugar levels are elevated as a result of the body's failure to produce enough insulin or use it efficiently.

Type 2 Diabetes

A chronic condition characterized by insulin resistance and high blood sugar levels, often associated with obesity and lifestyle factors.

Overweight

Having a body weight more than what is considered normal or healthy for a certain height, often due to excess body fat.

Daily Medication

Pharmaceutical substances taken on a regular basis to treat or manage chronic conditions or diseases.