Atlantic Industries Manufactures 40,000 Components Per Year An Outside Supplier Has Offered to Sell the Component for the Components

question 68

Multiple Choice

Atlantic Industries manufactures 40,000 components per year.The manufacturing cost of the components was determined as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 75,000 \\\text { Direct labour } & 120,000 \\\text { Variable manufacturing overhead } & 45,000 \\\text { Fixed manufacturing overhead } & 60,000 \\\text { Total } & \$ 300,000\end{array}$$ An outside supplier has offered to sell the component for $12.75. What is the effect on income if Atlantic Industries purchases the component from the outside supplier?

• A) a $30,000 increase
• B) a $30,000 decrease
• C) a $270,000 increase
• D) a $270,000 decrease

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Definitions:

Aristotle

An ancient Greek philosopher and scientist, one of the greatest intellectual figures of Western history, he made vast contributions to various fields, including logic, metaphysics, ethics, and biology.

Moral Principles

Fundamental guidelines that govern ethical behavior, reflecting what is considered right or wrong in society.

Ethical Egoist

A moral theory asserting that individuals should act in ways that serve their own self-interest, positing that this approach ultimately benefits society as a whole.

Psychological Egoism

The thesis that people always act for their own self-interest, even when it seems as if they are acting for other people’s benefit (for example, in giving to charity, the egoist would say, the person is simply making himself or herself feel self-righteous).