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Omark Corporation currently manufactures a subassembly for its main product. The variable costs per ...

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Omark Corporation currently manufactures a subassembly for its main product. The variable costs per ...

Omark Corporation currently manufactures a subassembly for its main product. The variable costs per unit are $48, in addition to a $6 charge based on estimated selling expenses.

R-Corp has contacted Omark with an offer to sell them 5,000 of the subassemblies for $44.00 each. Omark will eliminate $50,000 of fixed overhead if it accepts the proposal.

What is increase or decrease in profit from accepting the offer?
A) $50,000 increase
B) $100,000 increase
C) $170,000 increase
D) $50,000 decrease
E) $70,000 increase

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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