Part P40 Is a Part Used in the Production of Air

question 25

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 $4.72 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation makes the part, how much will its operating income be?

• A)$71,500 greater than if the company bought the part
• B)$22,500 greater than if the company bought the part
• C)$26,500 greater than if the company bought the part
• D)$140,500 greater than if the company bought the part