Billings Company has the following costs when producing 100,000 units: $$\begin{array} { l r }
\text { Variable costs } & \$ 600,000 \
\text { Fixed costs } & 900,000
\end{array}$$ 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

Billings Company has the following costs when producing 100,000 units: $$\begin{array} { l r } 
\text { Variable costs } & \$ 600,000 \
\text { Fixed costs } & 900,000
\end{array}$$ 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.

Quizplus · Accepted Answer

The Answer of Billings Company has the following costs when producing 100,000 units: $$\begin{array} { l r } 
\text { Variable costs } & \$ 600,000 \
\text { Fixed costs } & 900,000
\end{array}$$ 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} { l r } \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 $\begin{array} { l r } \text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$