Answer the Following Questions Using the Information Below:
Genent's Engine

question 128

Multiple Choice

Answer the following questions using the information below:
Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:
$\begin{array}{lr}\text { Direct materials } & \$ 46,000 \\\text { Direct labor } & 11,500 \\\text { Variable overhead costs } & 34,500 \\\text { Fixed overhead costs } & 23,000 \\\quad \text { Total costs } & \$ 115,000\end{array}$ It is estimated that 8% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Genent's Engine Company has the option of purchasing the part from an outside supplier at $97.75 per unit.
-If Genent's Engine Company purchases 1,000 TE456 parts from the outside supplier per month,then its monthly operating income will ________.

• A) increase by $3,910
• B) increase by $19,090
• C) decrease by $3,910
• D) decrease by $19,090

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Definitions:

Defensive Coping Strategies

Psychological tactics employed to protect oneself from stress, anxiety, or emotional pain, often by avoiding reality.

Appraise

To assess the value, quality, or significance of something, often for the purpose of making a decision.

Stressful

Relating to or causing stress, which is a physical or psychological response to demands or pressures.

Stressed-Out

A state of being overwhelmed or excessively worried due to pressures, demands, or challenges, often leading to physical and emotional strain.