Foster Industries Manufactures 20,000 Components Per Year

question 86

Multiple Choice

Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows: An outside supplier has offered to sell the component for $25.50.
What is the effect on income if Foster Industries purchases the component from the outside supplier?

• A) $30,000 decrease
• B) $30,000 increase
• C) $90,000 decrease
• D) $90,000 increase

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Definitions:

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