Sanchez Semiconductors Produces 200,000 High-Tech Computer Chips Per Month

question 91

Multiple Choice

Sanchez Semiconductors produces 200,000 high-tech computer chips per month.Each chip uses a component that Sanchez makes in-house.The variable costs to make the component are $1.40 per unit,and the fixed costs are $1,100,000 per month.The company has been approached by a foreign producer who can supply the component,within acceptable quality standards,for $1.10 each.If the company chooses to outsource,fixed costs can be reduced by 30%.There are no other uses for the facilities currently employed in making the component.What would be the effect on operating income,if the company decides to outsource?

• A)There would be no effect on operating income.
• B)Operating income would increase by $390,000.
• C)Operating income would increase by $220,000.
• D)Operating income would decrease by $60,000.

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Vanishing Americans

A term historically reflecting the declining population and cultural disappearance of Native Americans.

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The proportion of births in a population over a certain period of time, often expressed per 1,000 individuals per year.

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The ability to regulate one's emotions, thoughts, and behavior in face of temptations and impulses.