Valuable Electronics Uses a Standard Part in the Manufacture of Different

question 131

Multiple Choice

Valuable Electronics uses a standard part in the manufacture of different types of radios.The total cost of producing 42,000 parts is $100,000,which includes fixed costs of $40,000 and variable costs of $60,000.The company can buy the part from an outside supplier for $1 per unit and avoid 20% 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 Valuable outsources,what will be the effect on operating income?

• A)increase of $42,000
• B)decrease of $42,000
• C)decrease of $8,000
• D)increase of $16,000

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Definitions:

Traditional Communities

Societies or groups that adhere to longstanding customs, practices, and values, often resisting modern changes.

Modernity

A term that characterizes industrialized societies, including the decline of tradition, an increase in individualism, and a belief in progress, technology, and science.

Autonomy

The capacity to make an informed, uncoerced decision; often refers to the self-governance of individuals or groups.

Cultural Imperialism

The imposition of one culture’s beliefs and practices on another culture through media and consumer products rather than by military force.