Valuable Electronics Uses a Standard Part in the Manufacture of Different

question 146

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. Assume that free factory space can be used to manufacture another product that can earn profit of $15,000. If Valuable outsources, what will be the effect on operating income?

• A)increase of $3,000
• B)decrease of $12,000
• C)decrease of $8,000
• D)increase of $5,000

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Definitions:

Superior Skill

An elevated level of expertise or proficiency in a particular area or field.

Contributory Negligence

A defense in a tort claim where the plaintiff is found to have contributed to their own harm, potentially reducing or eliminating the defendant's liability.

Last Clear Chance

A doctrine in tort law that allows the plaintiff to recover damages even if they were partly at fault, if the defendant had the last opportunity to avoid the accident.

Emergency Conditions

Situations or conditions that require immediate action or attention due to potential threat or harm.