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Armstrong Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.40 per unit, and avoid 30% of the fixed costs. If Armstrong Valley Bicycles makes the part, how much will its operating income be? O $47,600 greater than if the company bought the part $49,600 greater than if the company bought the part O $45,600 greater than if the company bought the part $90,400 less than if the company bought the part

Armstrong Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.40 per unit, and avoid 30% of the fixed costs. If Armstrong Valley Bicycles makes the part, how much will its operating income be? O $47,600 greater than if the company bought the part $49,600 greater than if the company bought the part O $45,600 greater than if the company bought the part $90,400 less than if the company bought the part

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Armstrong Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.40 per unit, and avoid 30% of the fixed costs. If Armstrong Valley Bicycles makes the part, how much will its operating income be? O $47,600 greater than if the company bought the part O $49,600 greater than if the company bought the part $45,600 greater than if the company bought the part O $90,400 less than if the company bought the part
Transcribed Image Text:Armstrong Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.40 per unit, and avoid 30% of the fixed costs. If Armstrong Valley Bicycles makes the part, how much will its operating income be? O $47,600 greater than if the company bought the part O $49,600 greater than if the company bought the part $45,600 greater than if the company bought the part O $90,400 less than if the company bought the part
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