The Talbot Corporation makes wheels that it uses in the production of bicycles Talbots costs to produce 170000 wheels annually are 34000 Direct

The Talbot Corporation makes wheels that it uses in the production of bicycles Talbots costs to produce 170000 wheels annually are 34000 Direct

The Talbot Corporation makes wheels that it uses in the production of bicycles. Talbot's costs to produce 170,000 wheels annually are: $34,000 Direct materlals $51,000 DIrect labon Varlable manufacturing overhead Flxed manufacturing overhead $25.500 $65,000 An outside supplier has offered to sell Talbot similar wheels for $0.80 per wheel. If the wheels are purchased from the outside supplier, $20,000 of annual fixed overhead could be avoided and the facilities now If Talbot chogses to buy the wheel from the ou itside supplier then annual net operating income would: increase by $44,2O0 increase by $55.300 decrease by $5,500 increase by $34,000 O O O