Cooper CoMakes and Uses 5,000 Components Each Year in Its Manufacturing

question 47

Multiple Choice

Cooper 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 Cooper accepts the order,$8 of fixed overhead per unit will be eliminated.
-If Cooper 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:

Market Share

The percentage of an industry's total sales that is earned by a particular company over a specific time period, indicating the company's size and competitiveness in the market.

BCG Matrix

The BCG matrix is a framework for analyzing a company's product portfolio based on market growth and market share, categorizing them as stars, question marks, cash cows, or dogs.

Cost Leadership Strategy

A business approach aiming to become the lowest-cost producer in the industry, often by achieving economies of scale.

Competitive Advantage

The conditions that allow a company or country to produce goods or services more effectively than competitors.