Beal Company manufactures exhaust systems used in its personal watercraft at a cost of $43...
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Accounting
Beal Company manufactures exhaust systems used in its personal watercraft at a cost of $43 per unit. The cost consists of $16 of direct materials, $8 of direct labor, and $19 of overhead ($11 variable and $8 fixed.) 700 units are manufactured each month. $3 of the fixed overhead costs per unit are unavoidable, and would be absorbed by other departments if production were outsourced.
A representative from Wall Corp. has offered to sell Beal identically functioning exhaust systems for $41 per unit. If Beal accepts the offer, by what amount will monthly net income (decrease)?
a). $1,400
b). $(1,400)
c). $(11,900)
d). $(4,200)
e). $(700)
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