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bernie2981 bernie2981
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8 years ago
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. The company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs.

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 $12,000 profit. If Harvey Automobiles makes the part, what will its operating income be?
A) $54,000 greater than if the company bought the part
B) $30,000 greater than if the company bought the part
C) $150,000 greater than if the company bought the part
D) $30,000 less than if the company bought the part
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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bernie2981 Author
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#2
8 years ago
Wow! Thank you
wrote...
#3
4 years ago
Thanks!
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