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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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