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Your Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is:

Your Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is:

Direct materials $4.50

Direct labor $4.60

Variable manufacturing overhead $3.75

Fixed manufacturing overhead $3.40

An outside supplier has offered to supply all the motors the company needs for $15 each. If Your Company decides to buy the motors, there would be no other use for the production facilities and 25% of the fixed manufacturing overhead cost could not be avoided. If Your Company decides to buy the motor, what is the change in net income net operating income?

A. $45,500

B. $ 14,000

C. ($45,500)

D. ($14,000)

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