Shickman Company makes the widgets it uses in one of its products at a cost of $8 per unit. This cost includes $2 of fixed overhead. The company needs 10,000 of these plugs annually, and Orlando Company has offered to sell them at $5 per unit. If Shickman Company purchases the plugs, the company would: a. Increase profits by $30,000.
B) Decrease profits by $10,000.
C) Increase profits by $10,000.
D) Decrease profits by $30,000.

Question

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The Answer of Shickman Company makes the widgets it uses in one of its products at a cost of $8 per unit. This cost includes $2 of fixed overhead. The company needs 10,000 of these plugs annually, and Orlando Company has offered to sell them at $5 per unit. If Shickman Company purchases the plugs, the company would: a. Increase profits by $30,000.
B) Decrease profits by $10,000.
C) Increase profits by $10,000.
D) Decrease profits by $30,000.

Shickman Company Makes the Widgets It Uses in One of Its