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Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of pro

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Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of pro

Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes fixed costs of $60,000 and variable costs of $60,000. By outsourcing the part, the company can avoid 30% of the fixed costs.

If Harvey Automobiles buys the part, what is the most Harvey Automobiles can spend per unit so that operating income equals the operating income from making the part?
A) $1.30
B) $1.95
C) $2.33
D) $4.05

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Managerial Accounting

Edition: 4^th

Author: Braun

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bernie2981 Author

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8 years ago

Answers my question perfectly.

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acarne

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3 years ago

Thank you

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