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Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes
Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes fixed costs of $50,000 and variable costs of $70,000 The company can buy the part from an outside supplier for $3.20 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 $15,000 profit. If the company makes the part, what will its operating income be? OA. $148,000 greater than if the company bought the part OB. $28,000 greater than if the company bought the part OC. $50,000 greater than if the company bought the part OD. $28,000 less than if the company bought the part
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