Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost ofproducing 30,000 parts is $100,000, which includes fixed costs of $40,000 and variable costs of $60,000. The companycan buy the part from an outside supplier for $2 per unit and avoid 20% of the fixed costs. Assume that the company canuse the freed manufacturing space to make another product that can earn a profit of $16,000. If Voltaic outsources, whatwill be the effect on operating income?A. decrease of $8,000B. decrease of $24,000C. increase of $16,000D. increase of $24,000

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Answered: Voltaic Electronics uses a standard…

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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