Waterway Industries incurs the following costs to produce 10600 units of a subcomponent: Direct materials $8904 Direct labor 11978 Variable overhead 13356 Fixed overhead 16200 An outside supplier has offered to sell Waterway the subcomponent for $2.85 a unit. If Waterway accepts the offer, by how much will net income increase (decrease)? a. $(3074) b. $(9328) c. $4028 d. $20228

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EA: Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special...
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Waterway Industries incurs the following costs to produce 10600 units of a subcomponent:

Direct materials $8904
Direct labor 11978
Variable overhead 13356
Fixed overhead 16200

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

If Waterway accepts the offer, by how much will net income increase (decrease)?

a. $(3074)
b. $(9328)
c. $4028
d. $20228

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