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:

Blood Glucose

The concentration of glucose present in the blood, important for energy supply and metabolic regulation.

Consuming Meal

The act of eating food, which initiates the digestion process and provides the body with nutrients and energy.

Exercise

Physical activity that is planned, structured, and repetitive for the purpose of conditioning any part of the body, to improve health and maintain fitness.

Endocrine System

A collection of glands in the body that secrete hormones directly into the circulatory system to be carried towards distant target organs.