Solution-By how much net income would increase or decrease

By how much net income would increase or decrease

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Reference no: EM133154950

Question - Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent:

Direct materials $8,400

Direct labor 11,250

Variable overhead 12,600

Fixed overhead 16,200

An outside supplier has offered to sell Clemente the subcomponent for $2.85 a unit.

If Clemente could avoid $3,000 of fixed overhead by accepting the offer, net income would increase (decrease) by

a. $750.

b. $(5,850).

c. $(3,150).

d. $6,750.

Reference no: EM133154950

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By how much net income would increase or decrease

Reference no: EM133154950

Reference no: EM133154950

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