Question
Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed
Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $50,000 and variable costs of $110,000. The company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs.
If Harvey Automobiles makes the part,how much will its operating income be?
A.$145,000 greater than if the company bought the part
B.$145,000 less than if the company bought the part
C.$55,000 greater than if the company bought the part
D.$55,000 less than if the company bought the part
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