Fornelli, Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r }
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli, Inc. can purchase the units externally for $40,000, by what amount will its total costs change?
A)An increase of $40,000
B)An increase of $2,500
C)An increase of $8,500
D)A decrease of $11,000

Question

Fornelli, Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli, Inc. can purchase the units externally for $40,000, by what amount will its total costs change?
A)An increase of $40,000
B)An increase of $2,500
C)An increase of $8,500
D)A decrease of $11,000

Quizplus · Accepted Answer

The Answer of Fornelli, Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 15,000 \
\text { Direct Labor } & 6,500 \
\text { Variable Overhead } & 16,000 \
\text { Fixed Overhead } & 11,000
\end{array}$$ If Fornelli, Inc. can purchase the units externally for $40,000, by what amount will its total costs change?
A)An increase of $40,000
B)An increase of $2,500
C)An increase of $8,500
D)A decrease of $11,000

Fornelli, Inc If Fornelli, Inc