Olive Corp.currently makes 20,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Olive Corp.with the 20,000 subcomponents at a $36 per unit price.Fixed overhead is not avoidable.If Olive Corp.accepts the outside offer,what will be the effect on short-term profits?
A)$160,000 decrease
B)$320,000 increase
C)$160,000 increase
D)$80,000 decrease

Question

Olive Corp.currently makes 20,000 subcomponents a year in one of its factories.The unit costs to produce are:  An outside supplier has offered to provide Olive Corp.with the 20,000 subcomponents at a $36 per unit price.Fixed overhead is not avoidable.If Olive Corp.accepts the outside offer,what will be the effect on short-term profits?
A)$160,000 decrease 
B)$320,000 increase 
C)$160,000 increase 
D)$80,000 decrease

Quizplus · Accepted Answer

The Answer of Olive Corp.currently makes 20,000 subcomponents a year in one of its factories.The unit costs to produce are:  An outside supplier has offered to provide Olive Corp.with the 20,000 subcomponents at a $36 per unit price.Fixed overhead is not avoidable.If Olive Corp.accepts the outside offer,what will be the effect on short-term profits?
A)$160,000 decrease 
B)$320,000 increase 
C)$160,000 increase 
D)$80,000 decrease