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Valuable Electronics Uses a Standard Part in the Manufacture of Different

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Valuable Electronics uses a standard part in the manufacture of different types of radios.The total cost of producing 29,000 parts is $105,000,which includes fixed costs of $50,000 and variable costs of $55,000.The company can buy the part from an outside supplier for $2 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 Valuable outsources,what will be the effect on operating income?

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Definitions:

Drug Trafficking

The illegal trade involving the cultivation, manufacture, distribution, and sale of substances subject to drug prohibition laws.

Racial Stereotypes

Generalized beliefs or assumptions about the characteristics, attributes, and behaviors of members of a particular race, often leading to simplistic and erroneous judgements.

Violent Crime

Acts of crime that involve force or the threat of force against others, including homicide, rape, robbery, and assault.

Suburbs

Residential areas located on the outskirts of a city or large town, typically characterized by lower population density than urban centers but more than rural areas.

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