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:

Decision Making Model

A structured approach to making choices among various alternatives, based on different factors, steps, or stages designed to lead to a desired outcome.

Influence Methods

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Organizational Innovation

The process of implementing new ideas, workflows, methodologies, or services within an organization to improve efficiency and outcomes.

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