Question
KI Corporation produces 10,000 units of K101 each week for use in the assembly of its finished products. The unit cost of K101 is based
KI Corporation produces 10,000 units of K101 each week for use in the assembly of its finished products. The unit cost of K101 is based on a production level of 10,000 units per week as follows:
Variable cost per unit: $45
Fixed cost per unit: $20
K01 also can be purchased from an outside supplier at $50 per unit. If K101 is purchased from the outside supplier, 30% of KI's fixed production costs can be eliminated. If KI purchases K101 from the outside supplier, then KI, operating income will?
A, Increase by $10,000
B. Remain the same
C. Decrease by $10,000
D. Increase by $150,000
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