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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.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 7E: Make-or-buy decision Somerset Computer Company has been purchasing carrying cases for its portable...
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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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