Anderson Co

question 22

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: 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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