1. The budget committee would not normally include the

external auditor.

treasurer.

sales manager.

research director.

2.

Sheridan Company produces 5000 units of part A12E. The following costs were incurred for that level of production:

Direct materials	$ 55000
Direct labor	160000
Variable overhead	75000
Fixed overhead	175000

If Sheridan buys the part from an outside supplier, $40000 of the fixed overhead is avoidable. If the outside supplier offers a unit price of $68, net income will increase (decrease) by

$(10000).

$125000.

$85000.

$(50000).