Question
Priestly Automobiles Company fabricates automobiles. Each vehicle includes one wiring harness, which is currently made inminushouse. Details of the harness fabrication are as follows: Volume
Priestly Automobiles Company fabricates automobiles. Each vehicle includes one wiring harness, which is currently made inminushouse. Details of the harness fabrication are as follows: Volume 700 units per month Variable cost per unit $ 6 per unit Fixed costs $ 14 comma 000 per month An Indonesian factory has offered to supply Priestly with readyminusmade units for a price of $ 13 per wiring harness. Assume that Priestly's fixed costs are unavoidable, but that Priestly could use the vacated production facilities to earn an additional $ 9 comma 500 of profit per month. If Priestly decides to outsource, monthly operating income will
increase by $ 9 comma 500$9,500
B.
decrease by $ 14 comma 000$14,000
C.
decrease by $ 22 comma 800$22,800
D.
increase by $ 4 comma 600$4,600
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