Blue Ridge Bicycles Uses a Standard Part in the Manufacture

question 236

Multiple Choice

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 42,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs. 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 $15,000 profit. If Blue Ridge Bicycles makes the part, what will its operating income be?

• A)$41,600 greater than if the company bought the part
• B)$41,600 less than if the company bought the part
• C)$71,600 greater than if the company bought the part
• D)$179,600 greater than if the company bought the part

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Definitions:

Workers' Rights

Encompass a range of legal rights and protections afforded to workers, including the rights to safe working conditions, fair pay, and freedom from discrimination.

Neoliberal Market Ideology

An economic philosophy advocating for minimal state intervention in the economy, emphasizing free markets, privatization, and deregulation.

Employment Relationship

Describes the legal and practical connection between employers and employees, encompassing rights, responsibilities, and obligations.

Labor Unions

Organizations that represent the collective interests of workers, negotiating wages, working conditions, and benefits with employers.