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Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical control) machine
Rubber City Cycles manufactures carbon fiber bicycle frames for professional racing and avid amateur cyclists. Rubber City has found a CNC (computer numerical control) machine that will significantly reduce manufacturing waste while improving the quality of the frames. The new CNC machine will increase annual fixed costs by S138,580, but will decrease variable cost per unit by S190. Rubber City expects to sel 950 frames next year. Annual data for the current system are as follows: Average selling price per frame $1,270 Average variable manufacturing cost per frame $700 Average variable selling cost per frame $78 Total annual fixed costs S146,500 By what amount will Rubber City's operating income increase (decrease) if they purchase the new CNC machino? OA (541.920) OB $352,620 OC. (5362 820) OD. 941,920
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