Office Tech Inc. is currently purchasing a standard part for $25 per unit which is used for manufacturing different types of devices. The company is operating at 80% capacity and can make the part at a cost of $30 per unit which include an allocated fixed cost per unit of $8. If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the impact on operating income if Office Tech makes the part? Group of answer choices Operating income would be decreased by $90,000. Operating income would be increased by $90,000. Operating income would be decreased by $150,000. Operating income would be increased by $150,000.
Office Tech Inc. is currently purchasing a standard part for $25 per unit which is used for manufacturing different types of devices. The company is operating at 80% capacity and can make the part at a cost of $30 per unit which include an allocated fixed cost per unit of $8. If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the impact on operating income if Office Tech makes the part? Group of answer choices Operating income would be decreased by $90,000. Operating income would be increased by $90,000. Operating income would be decreased by $150,000. Operating income would be increased by $150,000.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...
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Question
Office Tech Inc. is currently purchasing a standard part for $25 per unit which is used for manufacturing different types of devices. The company is operating at 80% capacity and can make the part at a cost of $30 per unit which include an allocated fixed cost per unit of $8.
If the company decide to use the idle manufacturing space to produce 30,000 units of parts, what would be the impact on operating income if Office Tech makes the part?
Group of answer choices
Operating income would be decreased by $90,000.
Operating income would be increased by $90,000.
Operating income would be decreased by $150,000.
Operating income would be increased by $150,000.
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