Transcribed Image Text: Midas Industries manufactures 20,000 components per year. The manufacturing cost of components was determined as follows: Direct materials 100,000 ,Direct labor 160,000, Variable manufacturing overhead 60,000, Fixed

Transcribed Image Text: Midas Industries manufactures 20,000 components per year. The manufacturing cost of components
was determined as follows:
Direct materials 100,000 ,Direct labor 160,000, Variable manufacturing overhead 60,000, Fixed
manufacturing overhead 80,000.
An outside supplier has offered to sell the component for 17. If it purchases the component from the
outside supplier, the manufacturing facilities would be unused and could be rented out for 10,000.
If Midas purchases the component from the supplier instead of manufacturing it, the effect on
income would be:
A. 70,000 increase. B.50,000 decrease. C.10,000 decrease. D.30,000 increase.

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