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8. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials Direct labor $8,500 $10,250 Variable overhead $10,600 Fixed
8. Clemente Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials Direct labor $8,500 $10,250 Variable overhead $10,600 Fixed overhead $14,200 An outside supplier has offered to sell Clemente the subcomponent for $4.50 a unit. All of the variable costs are avoidable. None of the fixed costs are avoidable. If Clemente accepts the offer, by how much will net income increase (decrease)? a. $15,650 b. $(15,650) c. $43,500 d. $2,850 c. None of these choices
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