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Fruit Basket Company manufactures fruit baskets. The basket component, not including the fruit, is made in-house. Details of the baskets are as follows: Volume 900
Fruit Basket Company manufactures fruit baskets. The basket component, not including the fruit, is made in-house. Details of the baskets are as follows:
A foreign factory has offered to supply Fruit Basket Company with ready-made baskets for a price of $12 per basket. Assume that Fruit Basket Company's fixed costs are unavoidable, but that Fruit Basket Company could use the vacated production facilities to earn an additional $7500 of profit per month. If Fruit Basket Company decides to outsource, monthly operating income will increase by ________.
Volume | 900 | units per month |
Variable cost per unit | $8 | per unit |
Fixed costs | $14,000 | per month |
Group of answer choices
$14,000
$3900
$7500
$25,500
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