Harvey Automobiles Uses a Standard Part in the Manufacture of Several

question 83

Multiple Choice

Harvey Automobiles uses a standard part in the manufacture of several of its trucks.The cost of producing 40,000 parts is $120,000,which includes fixed costs of $60,000 and variable costs of $60,000.By outsourcing the part,the company can avoid 30% of the fixed costs.
If Harvey Automobiles buys the part,what is the most Harvey Automobiles can spend per unit so that operating income equals the operating income from making the part?

• A)$1.30
• B)$1.95
• C)$4.05
• D)$2.33

---

Definitions:

Information Sectors

Refers to specific segments of the economy dedicated to the production and dissemination of information, such as media, telecommunications, and IT services.

Technology Sectors

Categories within the technology industry, each focusing on a specific area of technology such as software, hardware, or telecommunications.

Exercise

Physical activities performed to maintain or improve health and fitness.

Day-to-Day Existence

The routine activities and experiences that constitute an individual's daily life.