Valuable Electronics Uses a Standard Part in the Manufacture of Different

question 6

Multiple Choice

Valuable Electronics uses a standard part in the manufacture of different types of radios manufactured by it. The total cost of producing 25,000 parts is $95,000, which includes fixed costs of $40,000 and variable costs of $55,000. The company can buy the part from an outside supplier for $3 per unit, and avoid 20% of the fixed costs. If Valuable Electronics decides to outsource the production of the part, how will it impact its operating income?

• A)increase of $12,000
• B)decrease of $12,000
• C)increase of $20,000
• D)decrease of $20,000

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Definitions:

Highest-Energy Structure

The conformation or arrangement of atoms in a molecule that has the highest potential energy, often least stable, compared to other conformations.

Molecular Collision

The process in which two or more particles (atoms, ions, molecules) come into close enough proximity to affect each other's trajectories or engage in a chemical reaction.

Activation Energy

The minimum amount of energy required to initiate a chemical reaction or the energy barrier to the reaction's progress.

Reaction-Energy Diagram

A graphical representation showing the energy of a system as reactants transform into products during a chemical reaction, usually highlighting energy barriers and stable intermediates.