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Foster Industries Manufactures 20,000 Components Per Year

Question 96

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Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows: Foster Industries manufactures 20,000 components per year.The manufacturing cost of the components was determined as follows:   An outside supplier has offered to sell the component for $25.50. Foster 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 Foster purchases the component from the outside supplier? A)  $45,000 increase B)  $15,000 increase C)  $75,000 decrease D)  $105,000 increase An outside supplier has offered to sell the component for $25.50.
Foster 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 Foster purchases the component from the outside supplier?


A) $45,000 increase
B) $15,000 increase
C) $75,000 decrease
D) $105,000 increase

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