Assume That There Is No Other Use for the Capacity

question 141

Multiple Choice

Assume that there is no other use for the capacity now being used to produce the component and the total fixed manufacturing overhead of the company would be unaffected by this decision.If Rogers Company purchases the components rather than making them internally,what would be the impact on the company's annual net operating income?

• A) $237,600 decrease.
• B) $81,000 decrease.
• C) $94,500 increase.
• D) $124,000 increase.

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