Use the Information Below to Answer the Following Question(s)

question 226

Multiple Choice

Use the information below to answer the following question(s) :
Part Z45 is a part used in the production of blenders at Andrew Corporation. The following costs and data relate to the production of Part Z45:

Andrew Corporation can purchase the part from an outside supplier for $4.25 per unit. If they purchase from the outside supplier, 40% of the fixed costs would be avoided.
-If Andrew Corporation purchases the part, how much will its operating income be?

• A) $3,000 less than if the company made the part
• B) $24,000 less than if the company made the part
• C) $1,000 less than if the company made the part
• D) $5,000 greater than if the company made the part

---

Definitions:

Redistribute

The act of allocating resources or wealth in a different manner, often aiming at a more equitable distribution.

Bond Trustee

A third party in a bond agreement who ensures that the issuer meets all terms and conditions for the benefit of bondholders.

Redemption Payments

Payments made to buy back or retire a financial instrument, such as bonds, from investors before its maturity date.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date, typically at a predefined call price.