DC Electronics uses a standard part in the manufacture of several of its radios. The cost of producing 30,000 parts is $90,000, which includes fixed costs of $33,000 and variable costs of $57,000. The company can buy the part from an outside supplier for $2.50 per unit, and avoid 30% of the fixed costs.
If DC Electronics makes the part, how much will its operating income be?
A) $6,500 greater than if the company bought the part
B) $8,100 greater than if the company bought the part
C) $5,100 less than if the company bought the part
D) $15,000 less than if the company bought the part
Correct Answer:
Verified
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