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Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 39.000 parts is $95,000.00, which includes
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 39.000 parts is $95,000.00, which includes fixed costs of $40,000.00 and variable costs of $55,000.00. The company can buy the part from an outside supplier for $1.00 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 $17,000.00. If Voltaic outsources, what will be the effect on operating income? O A. increase of $17,000.00 OB. decrease of $45,000.00 O C. decrease of $12,000.00 D. increase of $45,000.00 Value Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 28,000 parts is $90,000.00, which includes fixed costs of $30,000.00 and variable costs of $60,000.00. The company can buy this part from an external supplier for $5.00 per unit and avoid 10% of the fixed costs. If Value Electronics decides to outsource the production of the part, how will it impact its operating income? O A. Operating income decreases by $80,000.00 OB. Operating income increases by $80,000.00 O C. Operating income increases by $77,000.00 OD. Operating income decreases by $77,000.00
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