Part P40 Is a Part Used in the Production of Air

question 241

Multiple Choice

Part P40 is a part used in the production of air conditioners at Jackson Corporation.The following costs and data relate to the production of Part P40:

Jackson Corporation can purchase the part from an outside supplier for $4.25 per unit.If they purchase from the outside supplier,50% of the fixed costs would be avoided.Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $2,000 profit.If Jackson Corporation makes the part,what will its operating income be?

• A)$5,500 less than if the company bought the part
• B)$5,500 greater than if the company bought the part
• C)9,500 greater than if the company bought the part
• D)$111,500 greater than if the company bought the part

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Definitions:

Acrosome

A vesicle at the tip of a sperm cell containing enzymes that help the sperm penetrate the egg.

Umbilical Cord

A flexible cordlike structure containing blood vessels and attaching a human or other mammalian fetus to the placenta during gestation.

DNA

Deoxyribonucleic acid, a self-replicating material which is present in nearly all living organisms as the carrier of genetic information.

Three Stages of Birth

The labor process divided into three parts: dilation of the cervix, delivery of the baby, and delivery of the placenta.