Voltaic Electronics Uses a Standard Part in the Manufacture of Different

question 163

Multiple Choice

Voltaic Electronics uses a standard part in the manufacture of different types of radios.The total cost of producing 36,000 parts is $110,000,which includes fixed costs of $50,000 and variable costs of $60,000.The company can buy the part from an outside supplier for $1 per unit and avoid 30% of the fixed costs.Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $16,000.If Voltaic outsources,what will be the effect on operating income?

• A)increase of $55,000
• B)decrease of $55,000
• C)decrease of $15,000
• D)increase of $16,000

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Definitions:

Social Facilitation

Stronger responses on simple or well-learned tasks in the presence of others.

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Private Ballot

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Informational Social Influence

A psychological phenomenon where individuals conform to the attitudes, behaviors, or beliefs of a group under the assumption that the group possesses more knowledge about the situation.