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A firm makes 100 microwave ovens per month, and each oven includes one electrical circuit. The firm currently makes the circuits in-house, but is considering
A firm makes 100 microwave ovens per month, and each oven includes one electrical circuit. The firm currently makes the circuits in-house, but is considering outsourcing the circuits at a cost of $38 each. The cost to make the circuits in-house includes $22 of variable costs per circuit and $6,000 of fixed costs per month. If the firm cannot reduce any fixed costs by outsourcing and there is no alternative use for the facilities being used to make circuits, the effect of outsourcing on the firm's operating income will be: O A. Stay the same O B. Decrease by $2,200 O C. Increase by $3,800 O D. Decrease by $1,600
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