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Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 190.000 wheels annually are as follows: An outside
Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce 190.000 wheels annually are as follows: An outside supplier has offered to sell Talboe similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier. $22,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $52, 100 per year. If Talboe chooses to buy the wheel from the outside supplier, then the change in annual net operating income is a: $45, 600 increase $64, 900 increase $6, 500 decrease $38,000 increase
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