Billings Company has the following costs when producing 100,000 units: $\begin{array}{lr}
\text { Variable costs } & \$ 600,000 \
\text { Fixed costs } & 900,000
\end{array}$ An outside supplier has offered to make the item at $4.50 a unit.If the decision is made to purchase the item outside, current production facilities could be leased to another company for $165,000.The net increase (decrease) in the net income of accepting the supplier's offer is
A)$285,000.
B)$315,000.
C)$(15,000).
D)$840,000.

Question

Quizplus · Accepted Answer

The Answer of Billings Company has the following costs when producing 100,000 units: $\begin{array}{lr}
\text { Variable costs } & \$ 600,000 \
\text { Fixed costs } & 900,000
\end{array}$ An outside supplier has offered to make the item at $4.50 a unit.If the decision is made to purchase the item outside, current production facilities could be leased to another company for $165,000.The net increase (decrease) in the net income of accepting the supplier's offer is
A)$285,000.
B)$315,000.
C)$(15,000).
D)$840,000.

Billings Company Has the Following Costs When Producing 100,000 Units Variable costs $600,000 Fixed costs 900,000\begin{array}{lr}\text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array} Variable costs Fixed costs ​$600,000900,000​

Billings Company Has the Following Costs When Producing 100,000 Units $\begin{array}{lr}\text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$