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Assume That the Compact Appliances Factory Space Freed Up by Purchasing

Question 207

Multiple Choice

Assume that the Compact Appliances 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 Compact Appliances buys the part, how will its operating income be affected?


A) $68,000 greater than if the company made the part
B) $68,000 less than if the company made the part
C) $178,000 greater than if the company made the part
D) $92,000 greater than if the company made the part

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