Ancinas Company produces printers and uses a standard part in the manufacture of several of its printers. The cost of producing 43,000 parts is $280,000, which includes fixed costs of $136,000 and variable costs of $144,000. The company can buy the part from an outside supplier for $5.00 per unit, and avoid 30% of the fixed costs. If Ancinas Company makes the part, how much will its operating income be? $30,200 less than if the company bought the part. $30,200 greater than if the company bought the part. $65,000 greater than if the company bought the part. $65,000 less than if the company bought the part.
Ancinas Company produces printers and uses a standard part in the manufacture of several of its printers. The cost of producing 43,000 parts is $280,000, which includes fixed costs of $136,000 and variable costs of $144,000. The company can buy the part from an outside supplier for $5.00 per unit, and avoid 30% of the fixed costs. If Ancinas Company makes the part, how much will its operating income be? $30,200 less than if the company bought the part. $30,200 greater than if the company bought the part. $65,000 greater than if the company bought the part. $65,000 less than if the company bought the part.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Ancinas Company produces printers and uses a standard part in the manufacture of several of its printers. The cost of producing 43,000 parts is $280,000, which includes fixed costs of $136,000 and variable costs of $144,000. The company can buy the part from an outside supplier for $5.00 per unit, and avoid 30% of the fixed costs. If Ancinas Company makes the part, how much will its operating income be?
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$30,200 less than if the company bought the part. |
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$30,200 greater than if the company bought the part. |
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$65,000 greater than if the company bought the part. |
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$65,000 less than if the company bought the part. |
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