Anderson Co If Anderson Accepts the Order,$8 of Fixed Overhead Per Unit

question 48

Multiple Choice

Anderson Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Anderson at $66 per unit.Anderson's production costs are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 8 \\\text { Direct labor } & 32 \\\text { Variable overhead } & 12 \\\text { Fixed overhead (based on normal capacity) } & 34\end{array}$ If Anderson accepts the order,$8 of fixed overhead per unit will be eliminated.
If the offer is accepted,operating income will

• A) increase by $100,000.
• B) decrease by $70,000.
• C) decrease by $30,000.
• D) increase by $60,000.

---

Definitions:

Synonymous Terms

Refers to words or phrases that share the same, or very similar, meanings in certain contexts.

Influencing Media

The act of affecting or shaping the content, perspective, or direction of media output through various forms of advocacy, communication, or strategic interaction.

Generating Publicity

The act of creating interest and awareness among the public or media about a person, product, or event, often through strategic communication and events.

Driving Business

Refers to the strategic actions and tactics employed by a company to promote growth, competitiveness, and profitability.