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Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 40,000 parts is $95,000, which
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 40,000 parts is $95,000, which includes fixed costs of $40,000 and variable costs of $55,000. The company can buy the part from an outside supplier for $2 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 $15,000. If Voltaic outsources, what will be the effect on operating income? OA. decrease of $2,000 OB. increase of $15,000 OC. increase of $2,000 D. decrease of $12,000
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