Office Expert Inc. produces a component which is required for manufacturing many of its appliances. The monthly production data for the component are as follows: Monthly Production Data for Component Production Data Amounts Number of units produced 2,500 units Variable costs per unit $10 per unit Total monthly fixed costs (allocated) $18,000 The company received an offer from a foreign supplier to purchase the component for $15 per unit. The monthly fixed costs are unavoidable. However, if Office Expert decides to purchase the component, they can use the freed manufacturing space to earn an additional revenue of $20,000 per month. If Office Expert decides to purchase from the foreign supplier, monthly operating income would – Group of answer choices Decrease by $24,000 Increase by $7,500 Increase by $25,500 Decrease by $12,500

Office Expert Inc. produces a component which is required for manufacturing many of its appliances. The monthly production data for the component are as follows: Monthly Production Data for Component Production Data Amounts Number of units produced 2,500 units Variable costs per unit $10 per unit Total monthly fixed costs (allocated) $18,000 The company received an offer from a foreign supplier to purchase the component for $15 per unit. The monthly fixed costs are unavoidable. However, if Office Expert decides to purchase the component, they can use the freed manufacturing space to earn an additional revenue of $20,000 per month. If Office Expert decides to purchase from the foreign supplier, monthly operating income would – Group of answer choices Decrease by $24,000 Increase by $7,500 Increase by $25,500 Decrease by $12,500

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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Production Data	Amounts
Number of units produced	2,500 units
Variable costs per unit	$10 per unit
Total monthly fixed costs (allocated)	$18,000

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