A Company fabricates inexpensive automobiles for sale to 3rd world countries. Each auto includes one wiring harness,
Question:
A Company fabricates inexpensive automobiles for sale to 3rd world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows:
A factory in Indonesia has offered to supply the company with ready-made units for a price of $14 each.
Assume that company?s fixed costs are unavoidable, but that company could use the vacated production facilities to earn an additional $7,500 of profit per month. What will be the impact on company?s monthly operating income, if company decides to outsource?
A) It will go up by $2,100.
B) It will go down by $14,000.
C) It will go up by $8,600.
D) It will go down by $400.
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren