Billings Company Has the Following Costs When Producing 100,000 Units $$\begin{array} { l r } \text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$$

question 109

Multiple Choice

Billings Company has the following costs when producing 100,000 units: $$\begin{array} { l r } \text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$$ An outside supplier has offered to make the item at $4.50 a unit.If the decision is made to purchase the item outside, current production facilities could be leased to another company for $165,000.The net increase (decrease) in the net income of accepting the supplier's offer is

• A)$285,000.
• B)$315,000.
• C)$(15,000).
• D)$840,000.