Thematics Publishing produces 10,000 binders each year. Each binder has a variable cost of $17 and total fixed costs of $110,000 per year. The binders can be purchased from an outside supplier for $20 each. The production space will remain idle, but fixed costs ΤΙ.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...
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Thematics Publishing produces 10,000
binders each year. Each binder has a
variable cost of $17 and total fixed
costs of $110,000 per year. The binders
can be purchased from an outside
supplier for $20 each. The production
space will remain idle, but fixed costs
can be reduced by 30%. The annual
impact of purchasing the binders will
be to:
increase operating income by $3,000.
increase operating income by $47,000.
decrease operating income by $3,000.
decrease operating income by
$47,000.
Transcribed Image Text:Thematics Publishing produces 10,000 binders each year. Each binder has a variable cost of $17 and total fixed costs of $110,000 per year. The binders can be purchased from an outside supplier for $20 each. The production space will remain idle, but fixed costs can be reduced by 30%. The annual impact of purchasing the binders will be to: increase operating income by $3,000. increase operating income by $47,000. decrease operating income by $3,000. decrease operating income by $47,000.
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