Concierge Industries manufactures 40,000 components per year. The manufacturing cost of the components was determined as follows: An outside supplier has offered to sell the component for $12.75.
Concierge 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 Concierge purchases the component from the outside supplier?
A) $195,000 increase
B) $165,000 decrease
C) $225,000 decrease
D) $135,000 increase

Question

Concierge Industries manufactures 40,000 components per year. The manufacturing cost of the components was determined as follows:  An outside supplier has offered to sell the component for $12.75.
Concierge 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 Concierge purchases the component from the outside supplier?
A) $195,000 increase 
B) $165,000 decrease 
C) $225,000 decrease 
D) $135,000 increase

Quizplus · Accepted Answer

The Answer of Concierge Industries manufactures 40,000 components per year. The manufacturing cost of the components was determined as follows:  An outside supplier has offered to sell the component for $12.75.
Concierge 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 Concierge purchases the component from the outside supplier?
A) $195,000 increase 
B) $165,000 decrease 
C) $225,000 decrease 
D) $135,000 increase

Concierge Industries Manufactures 40,000 Components Per Year