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Business, 21.02.2020 22:24 joshbolaadebawore

Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40 comma 000 parts is $ 138 comma 000, which includes fixed costs of $ 69 comma 000 and variable costs of $ 69 comma 000. The company can buy the part from an outside supplier for $ 3.70 per unit, and avoid 30% of the fixed costs. Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $ 16 comma 000 profit. If Blue Ridge Bicycles makes the part, what will its operating income be?

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