Talboe Company Makes Wheels Which It Uses in the Production

question 2

Multiple Choice

Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 200,000 wheels annually are as follows: An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $25,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $55,000 per year.
-If Talboe chooses to buy the wheel from the outside supplier,then the change in annual net operating income is a:

• A)$5,000 decrease
• B)$50,000 increase
• C)$70,000 increase
• D)$40,000 increase

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Definitions:

Medical Advice

Medical advice refers to recommendations given by health professionals based on their expertise and understanding of a patient's health condition.

Negative Attitude

A predisposition or a mindset that is characterized by cynicism, pessimism, or a general lack of enthusiasm about something or life in general.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, stemming from a traumatic event or persistent failure to succeed.

Fatalistic Thinking

The belief that all events are predetermined and therefore inevitable, often leading to a sense of powerlessness over one's future.