Harvey automobiles uses a standard part in the manufacture of several of its trucks. the cost of producing 40,000 parts is $120,000, which includes fixed costs of $60,000 and variable costs of $60,000. the company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs.
if harvey automobiles makes the part, how much will its operating income be?
select one:
a. $42,000 greater than if the company bought the part
b. $42,000 less than if the company bought the part
c. $78,000 greater than if the company bought the part
d. $78,000 less than if the company bought the part
Answers: 2
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