Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

image text in transcribed

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Glencoe Accounting Concepts Procedures Applicatons

Authors: McGraw-Hill Education

3rd Edition

0028036174, 978-0028036175

More Books

Students also viewed these Accounting questions