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Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part OC. $101,000 less than if the company bought the part O D. $135,000 less than if the company bought the part

Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part OC. $101,000 less than if the company bought the part O D. $135,000 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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Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part O C. $101,000 less than if the company bought the part O D. $135,000 less than if the company bought the part
Transcribed Image Text:Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part O C. $101,000 less than if the company bought the part O D. $135,000 less than if the company bought the part
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