Multiple Choice Question

Chris Co$.$ is currently producing $1,000$ surfboards annually. A supplier has offered to produce the boards for $$300$ each. Chris Co$.$ incurs unit$-$level costs of $$280$

per surfboard. Chris also spends $$25,000$ on product design each year and incurs $$50,000$ of facility$-$level costs. What is the effect on profit if Chris Co$.$

outsources the surfboards?

$$5,000$ increase

$$56,000$ decrease

$$56,000$ increase

$$5,000$ decrease

Need help? Review these concept resources.

Read About the Concept