Value Electronics Uses a Standard Part in the Manufacture of Different

question 151

Multiple Choice

Value Electronics uses a standard part in the manufacture of different types of radios.The total cost of producing 24,000 parts is $90,000,which includes fixed costs of $30,000 and variable costs of $60,000.The company can buy this part from an external supplier for $5 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?

• A) Operating income increases by $57,000.
• B) Operating income decreases by $57,000.
• C) Operating income increases by $60,000.
• D) Operating income decreases by $60,000.

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Definitions:

Prenatal Development

Relates to the process of growth and development within the womb from conception to birth.

Heterogeneity

Variability in the levels of development of different parts of an organism at a given time.

Organism

A living entity characterized by the capacity for metabolism, growth, reaction to stimuli, and reproduction.

Differentiation

The process of identifying and emphasizing the unique characteristics or features of something or someone.