Business, 17.04.2020 20:05 ayeasley7777

Rocky Creek Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 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 $15,000 profit.
Required:
1. If Rocky Creek Bicycles makes the part, what will its operating income be?

Answers: 2

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Rocky Creek Bicycles uses a standard part in the manufacture of several of its bikes. The cost of pr...