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:

Western Cultures

Societies or nations typically located in the Western hemisphere, characterized by distinct customs, legal systems, and moral values.

Panic Attacks

Short, intense periods during which an individual experiences physiological and cognitive symptoms of anxiety, characterized by intense fear and discomfort.

Dissociative Identity Disorder

A severe form of dissociation, a mental process that produces a lack of connection in a person's thoughts, memory, and sense of identity, formerly known as multiple personality disorder.

United States

A country in North America consisting of 50 states and a federal district, known for its significant impact on global politics, economy, and culture.