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:

Fugue State

A rare psychological state in which a person loses awareness of their identity or other important autobiographical information and often engages in unexpected travel or wandering.

Dissociative Identity Disorder

A severe form of dissociation characterized by the presence of two or more distinct identity or personality states that control an individual’s behavior in different circumstances.

Depersonalization/Derealization Disorder

Syndrome marked by frequent episodes of feeling detached from one’s own body and mental processes, as if one were an outside observer of oneself; symptoms must cause significant distress or interference with one’s ability to function.

Distressing Episodes

Episodes or periods characterized by intense emotional discomfort or pain, which can impact an individual's psychological well-being.