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What net income would increase or decrease by

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Reference no: EM132774342

Sunland Company incurs the following costs to produce 9200 units of a subcomponent:

Direct materials $7728

Direct labor  10396

Variable overhead 11592

Fixed overhead 16200

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

Problem 1: If Sunland could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by

Option 1: $6496.

Option 2: $496.

Option 3: $(5668).

Option 4: $(1888).

Reference no: EM132774342

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