Cotton Corp currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at a $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp rejects the outside offer,what will be the effect on short-term profits?

A)$260,000 increase
B)$195,000 decrease
C)no change
D)$65,000 increase

Question

Cotton Corp currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at a $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp rejects the outside offer,what will be the effect on short-term profits?

A)$260,000 increase 
B)$195,000 decrease 
C)no change 
D)$65,000 increase

Quizplus · Accepted Answer

The Answer of Cotton Corp currently makes 10,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at a $84.50 per unit price.Fixed overhead is not avoidable.If Cotton Corp rejects the outside offer,what will be the effect on short-term profits?

A)$260,000 increase 
B)$195,000 decrease 
C)no change 
D)$65,000 increase

Cotton Corp Currently Makes 10,000 Subcomponents a Year in One