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

question 60

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:

Supervisor's Causal Attributions

involves the reasoning and interpretations a supervisor makes regarding the causes of behaviors or outcomes observed in their subordinates.

Employee's Work Performance

The evaluation of how well an employee performs their job duties and responsibilities.

Internal Factors

Elements within an organization or individual that influence behavior, such as beliefs, emotions, knowledge, and motivation.

External Factors

Elements or conditions outside an individual or system that significantly affect outcomes or operations.