Author Question: Part Z45 is a part used in the production of blenders at Andrew Corporation. The following costs and ... (Read 75 times)

ssal · **on:** Jan 4, 2020

Part Z45 is a part used in the production of blenders at Andrew Corporation. The following costs and data relate to the production of Part Z45:

Number of parts produced annually	20,000
Fixed costs	$40,000
Variable costs	$66,000
Total cost to produce	$106,000

Andrew Corporation can purchase the part from an outside supplier for $4.25 per unit. If they purchase from the outside supplier, 40% of the fixed costs would be avoided.

If Andrew Corporation purchases the part, how much will its operating income be?
◦ $24,000 less than if the company made the part
◦ $3,000 less than if the company made the part
◦ $1,000 less than if the company made the part
◦ $5,000 greater than if the company made the part

orangecrush · **Reply #1 on:** Jan 4, 2020

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