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Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of procuding 36,000 parts is $110,000, which unlcudes
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of procuding 36,000 parts is $110,000, which unlcudes fixed costs of $50,000 and variables costs of $60,000. The comoany can buy the part from an outside supplier for $1 per unit and avoid 30% of the fixed costs. Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $16,000. If Votaic outsources, what will be the effect on operating income?
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