Walsh Automobile Company fabricates automobiles. Each vehicle includes one airflow sensor, which is currently made in-house. Details of the airflow sensor fabrication are as follows: Volume Variable cost per unit Fixed costs units per month per unit $13,000 per month A. decrease by $4,000 B. increase by $13,000 O C. decrease by $13,000 O D. increase by $4,800 800 $6 A Japanese factory has offered to supply Walsh with ready-made units for a cost of $16 per sensor. Assume that Walsh's fixed costs could be reduced by $4,000 if it outsources and that Walsh will not be able to use the excess capacity in any profitable manner. If Walsh decides to outsource, monthly operating income will:
Walsh Automobile Company fabricates automobiles. Each vehicle includes one airflow sensor, which is currently made in-house. Details of the airflow sensor fabrication are as follows: Volume Variable cost per unit Fixed costs units per month per unit $13,000 per month A. decrease by $4,000 B. increase by $13,000 O C. decrease by $13,000 O D. increase by $4,800 800 $6 A Japanese factory has offered to supply Walsh with ready-made units for a cost of $16 per sensor. Assume that Walsh's fixed costs could be reduced by $4,000 if it outsources and that Walsh will not be able to use the excess capacity in any profitable manner. If Walsh decides to outsource, monthly operating income will:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Walsh Automobile Company fabricates automobiles...
![Walsh Automobile Company fabricates automobiles. Each vehicle includes one
airflow sensor, which is currently made in-house. Details of the airflow sensor
fabrication are as follows:
Volume
Variable cost per unit
Fixed costs
800
$6
A. decrease by $4,000
O B. increase by $13,000
decrease by $13,000
C.
O D. increase by $4,800
units per month
per unit
$13,000 per month
A Japanese factory has offered to supply Walsh with ready-made units for a
cost of $16 per sensor. Assume that Walsh's fixed costs could be reduced by
$4,000 if it outsources and that Walsh will not be able to use the excess
capacity in any profitable manner. If Walsh decides to outsource, monthly
operating income will:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3aace27-b33b-46f5-a513-c4e2226423aa%2F7ae5c07b-8b79-41f1-a711-3a77383353ba%2Fy9wkqzj_processed.png&w=3840&q=75)
Transcribed Image Text:Walsh Automobile Company fabricates automobiles. Each vehicle includes one
airflow sensor, which is currently made in-house. Details of the airflow sensor
fabrication are as follows:
Volume
Variable cost per unit
Fixed costs
800
$6
A. decrease by $4,000
O B. increase by $13,000
decrease by $13,000
C.
O D. increase by $4,800
units per month
per unit
$13,000 per month
A Japanese factory has offered to supply Walsh with ready-made units for a
cost of $16 per sensor. Assume that Walsh's fixed costs could be reduced by
$4,000 if it outsources and that Walsh will not be able to use the excess
capacity in any profitable manner. If Walsh decides to outsource, monthly
operating income will:
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