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

question 159

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 accepts the offer, by how much will net income increase (decrease) ?

• A) $3,750
• B) $19,950
• C) $(8,850)
• D) $(2,850)

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Definitions:

Ingroup/Outgroup Bias

The tendency to favor individuals within our group while being prejudiced against or hostile toward those in other groups.

Mere Exposure Effect

The increase in liking due to repeated exposure.

Socialization

The process by which individuals learn and internalize the values, beliefs, and norms of their culture and society, shaping their personality and behavior.

Postdecisional Dissonance

A feeling of regret or anxiety after making a decision, questioning if the right choice was made.