Voyage Boat Company Manufactures 100 Luxury Yachts Per Month

question 127

Multiple Choice

Voyage Boat Company manufactures 100 luxury yachts per month.A compact media center is included in each yacht.Voyage Boat manufactures the media center in-house but is considering the possibility of outsourcing this function.At present,the variable cost per unit is $280,and the fixed costs are $42,000 per month.Aaron Dalton,the CEO,wishes to increase operating income by $3000.He has an offer from a foreign producer to provide the media centers at a contract cost of $350 per unit.The required savings in fixed costs in order to achieve his objective would be ________.

• A) $3000
• B) $7000
• C) $10,000
• D) $28,000