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Question 2 (3 points) Home Solutions provides testing for a number of hazardous conditions in residental and commercial buildings. The following table shows Home Solutions'
Question 2 (3 points) Home Solutions provides testing for a number of hazardous conditions in residental and commercial buildings. The following table shows Home Solutions' unit cost to process a residential radon test based on normal volume of 6,000 tests per month: Direct materials $4.00 Direct labor 1.00 Variable overhead 0.50 Fixed overhead 1.00 Total cost per unit $6.50 Another company offers to process the tests at a cost of $5.75 per test. If Home Solutions accepts the offer, they could eliminate some special purpose testing equipment only used for the radon tests, saving them $2,000 of fixed overhead each month. Home Solutions could also use the capacity which would become available to its black mold testing business, which would generate $1,000 more contribution per month By how much will Home Solutions' income change if they accept the other laboratory's offer to process the radon tests each month for $5.75 per test? A) Increase by $4,500 B) Increase by $1,500 C) Increase by $5,500 month. Home Solutions could also use the capacity which would to its black mold testing business, which would generate $1,000 n per month By how much will Home Solutions' income change if they accept t laboratory's offer to process the radon tests each month for $5.75 O A) Increase by $4,500 B) Increase by $1,500 C) Increase by $5,500 D) Increase by $1,000
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