ABC 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 $10 each. Assume that the company?s fixed costs are unavoidable, but the company could use the vacated production facilities to earn an additional $5,000 of profit per month. In order to maximize operating income, Doro Company should outsource.

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Volume Variable cost per unit Fixed costs 800 $7 $15,000 units per month per unit per month Volume Variable cost per unit Fixed costs 800 $7 $15,000 units per month per unit per month

Answer rating: 100% (QA)

The statement is TRUE Explanation Inhouse Outsour... View the full answer