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Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 31,000 parts is $95,000, which includes
Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 31,000 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 $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 $17,000. If Voltaic outsources, what will be the effect on operating income? A. O B. O C. D. decrease of $53,000 increase of $17,000 increase of $53,000 decrease of $12,000
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