A company has the choice of either selling 1,000 unfinished units as is or completing them. The company could sell the unfinished units as is for $4.00 per unit. Alternatively, it could complete the units with incremental costs of $1.00 per unit for direct materials, $2.00 per unit for direct labor, and $1.50 per unit for overhead, and then sell the completed units for $8.00 each. If the company completes the units, what is the impact on income?
A. Income will increase by $8,000.
B. Income will decrease by $500.
C. Income will increase by $500.
D. Income will increase by $4,000.
E. Income will decrease by $4,500.
Answer: B
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