Answer the Following Question(s)using the Information Below

question 34

Multiple Choice

Answer the following question(s) using the information below.Konrade's Engine Company manufactures part TE456 used in several of its engine models.Monthly production costs for 1,000 units are as follows:
It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier.Konrade's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
-If Konrade's Engine Company purchases 1,000 TE456 parts from the outside supplier per month, then its monthly operating income will

• A)increase by $13,000.
• B)increase by $15,000.
• C)decrease by $5,000.
• D)decrease by $3,000.
• E)decrease by $35,000.

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Definitions:

Supply Curve

A graph showing the relationship between the quantity of a good that producers are willing to sell and the price of the good.

Y Axis

The vertical axis in a graph or chart, typically used to represent the range of a second variable in comparison to the first variable on the X axis.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded.

Movement

Refers to a change in position, location, or state of an object or concept over time.