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K Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 90,000 parts is $160,000, which includes
K Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 90,000 parts is $160,000, which includes fixed costs of $80,000 and variable costs of $80,000. The company can buy the part from an outside supplier for $3.50 per unit and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $14,000 profit. If the company makes the part, what will its operating income be? OA $197,000 less than if the company bought the part OB. $357,000 greater than if the company bought the part OC. $197,000 greater than if the company bought the part OD. $70,000 greater than if the company bought the part
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