Make BuyIncrease(Decrease)

Direct Materials $28,000 -0-$28,000

Direct Labor 37,500-0-37,500

Variable Manufacturing 42,000-0-42,000

Overhead

Fixed Manufacturing

Overhead 54,00054,000-0-

Purchase price (6,000 x $24.00) -0-95,000(95,000)

Total Cost 161,500 149,000 12,500

If Clemente accepts the offer, it could use the production capacity to product another product that would generate additional income of $12,000. The increase (decrease) in net income from accepting the offer would be

a. $500

b. $24,5000

c. $(500)

d. $(12,000)

Please explain how you got the answer in greater detail. Thank you