Your Company produces batteries which are used in the production of their riding tractors. The costs to produce 25,000 batteries annually are as follows: Direct material Direct labor Variable overhead Fixed overhead Total $ 125,000 720,000 75,000 175,000 $1,095.000 An outside supplier has offered to sell Cloverleaf similar batteries for $40 per batteries. If they are purchased from the outside supplier, 40% of annual fixed factory overhead could be avoided. If Your Company decides to buy the battery, what is the change in net income net operating income? O A. $25,000 O B. ($25,000) OC. ($10,000) O D. $10,000

Your Company produces batteries which are used in the production of their riding tractors. The costs to produce 25,000 batteries annually are as follows: Direct material Direct labor Variable overhead Fixed overhead Total $ 125,000 720,000 75,000 175,000 $1,095.000 An outside supplier has offered to sell Cloverleaf similar batteries for $40 per batteries. If they are purchased from the outside supplier, 40% of annual fixed factory overhead could be avoided. If Your Company decides to buy the battery, what is the change in net income net operating income? O A. $25,000 O B. ($25,000) OC. ($10,000) O D. $10,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...

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