Assume That Factory Space Freed Up by Purchasing the Part

question 71

Multiple Choice

Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $2,000 profit. If Andrew Corporation makes the part, what will its operating income be?

• A) $1,000 less than if the company bought the part
• B) $5,000 greater than if the company bought the part
• C) $1,000 greater than if the company bought the part
• D) $2,000 greater than if the company bought the part

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Definitions:

Jewelry Store

A retail business establishment specializing in the sale of jewelry, including necklaces, rings, earrings, and bracelets, often offering repair services as well.

Bankruptcy Petition

A formal request filed in court by a debtor seeking relief from unmanageable debts, initiating bankruptcy proceedings.

Consumer Good

A good used or bought for use primarily for personal, family, or household purposes.

Insolvency

A financial state in which an individual or entity is unable to meet its debt obligations or pay its bills as they come due.