Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Cotton Corp.with the 10,000 subcomponents at an $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp.rejects the outside offer,what will be the effect on short-term profits?
A)$260,000 increase
B)$195,000 decrease
C)no change
D)$65,000 increase

Question

Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are:  An outside supplier has offered to provide Cotton Corp.with the 10,000 subcomponents at an $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp.rejects the outside offer,what will be the effect on short-term profits?
A)$260,000 increase 
B)$195,000 decrease 
C)no change 
D)$65,000 increase

Quizplus · Accepted Answer

The Answer of Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are:  An outside supplier has offered to provide Cotton Corp.with the 10,000 subcomponents at an $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp.rejects the outside offer,what will be the effect on short-term profits?
A)$260,000 increase 
B)$195,000 decrease 
C)no change 
D)$65,000 increase