Q1-JBC Inc. produces 10,000 binders each year. Each binder has a variable cost of $12. Total fixed costs are $80,000 per year. JBC can purchase the binders from an outside supplier for $18 each but will have to incur shipping fees of $1/binder. FC will remain the same but the company can use the freed space to make another product that will contribute $20,000 in operating income. If the binders are outsourced, what is the impact on the company's operating income?

options: a) operating income will decrease by $90,000 b) operating income will decrease by $70,000 c) operating income will decrease by $50,000 d) operating income will decrease by $30,000

Q2=

If overhead costs are not assigned accurately, some products will be overcosted and others will be undercosted.

Q2-options:

	a) True
	b) False