Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows: An outside supplier has offered to sell the component for $25.50.
Foster Industries can rent its unused manufacturing facilities for $45,000 if it purchases the component from the outside supplier.
What is the effect on income if Foster purchases the component from the outside supplier?
A) $45,000 increase
B) $15,000 increase
C) $75,000 decrease
D) $105,000 increase

Question

Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows:  An outside supplier has offered to sell the component for $25.50.
Foster Industries can rent its unused manufacturing facilities for $45,000 if it purchases the component from the outside supplier.
What is the effect on income if Foster purchases the component from the outside supplier?
A) $45,000 increase 
B) $15,000 increase 
C) $75,000 decrease 
D) $105,000 increase

Quizplus · Accepted Answer

The Answer of Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows:  An outside supplier has offered to sell the component for $25.50.
Foster Industries can rent its unused manufacturing facilities for $45,000 if it purchases the component from the outside supplier.
What is the effect on income if Foster purchases the component from the outside supplier?
A) $45,000 increase 
B) $15,000 increase 
C) $75,000 decrease 
D) $105,000 increase

Foster Industries Manufactures 20,000 Components Per Year