Olive Corp

Multiple Choice

Olive Corp.currently makes 20,000 subcomponents a year in one of its factories.The unit costs to produce are: An outside supplier has offered to provide Olive Corp.with the 20,000 subcomponents at a $36 per unit price.Fixed overhead is not avoidable.If Olive Corp.accepts the outside offer,what will be the effect on short-term profits?

A) $160,000 decrease
B) $320,000 increase
C) $160,000 increase
D) $80,000 decrease