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.

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Definitions:

Injuries

Physical harm or damage to a person's body caused by accidents, violence, negligence, or other external forces.

Independent Contractor

An individual or entity hired to perform work for another entity as a non-employee.

Mutual Accountability

Refers to a shared responsibility among members of a team or organization to achieve common goals and uphold commitments.

Collective Work

Involves tasks or projects undertaken by a group where responsibilities, resources, and outcomes are shared among members.