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Question: The following costs are incurred by Garrett Manufacturing when producing 150,000 units:

Variable costs $700,000

Fixed costs 900,000

An outside supplier has offered to make the item at $5.50 a unit. If the decision is made to purchase the item outside, current production facilities could be leased to another company for $170,000. The net increase (decrease) in the net income of accepting the supplier's offer is

$ 45,000

$775,000

$125,000

$75,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92572531

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