A company produces 400 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactures the circuit in-house but is considering outsourcing the circuits at a contract cost of $28 each. Currently, the cost of producing circuits in-house includes variable costs of $26 per circuit and fixed costs of $5000 per month. Assume the company could not reduce any fixed costs by outsourcing and that there is no alternative use for the facilities presently being used to make circuits. If the company outsources, operating income will ________.
A) increase by $11,200
B) decrease by $10,400
C) decrease by $800
D) stay the same
C) decrease by $800
You might also like to view...
Co-location of team members, team names, and team rituals are common vehicles for establishing a team identity.
Answer the following statement true (T) or false (F)
Applied to negotiations, ________ refers to the overall plan to accomplish one's goals in a negotiation and the action sequences that will lead to the accomplishment of those goals.
Fill in the blank(s) with the appropriate word(s).
"Breakeven" is the point at which a company can begin to earn a profit
Indicate whether the statement is true or false
Strategic retailing goals typically focus on increasing costs of goods sold
Indicate whether the statement is true or false a. True b. False