Question

Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 80,000 parts is $140,000, which includes fixed costs of $60,000 and variable costs of $80,000. By outsourcing the part, the company can avoid 30% of the foxed costs. If the company buys the part, what is the most it can spend per unit so that operating income equals the operating income from making the part? (Round the final answer to the nearest cent.) A. $1.75 B. $0.75 C. $1.23 D. $1.98

          Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 80,000 parts is $140,000, which includes fixed costs of $60,000 and variable costs of $80,000. By outsourcing the part, the company can avoid 30% of the foxed costs.
If the company buys the part, what is the most it can spend per unit so that operating income equals the operating income from making the part? (Round the final answer to the nearest cent.)
A. $1.75
B. $0.75
C. $1.23
D. $1.98

Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 80,000 parts is 140,000, which includes fixed costs of60,000 and variable costs of 80,000. By outsourcing the part, the company can avoid 30% of the foxed costs.
If the company buys the part, what is the most it can spend per unit so that operating income equals the operating income from making the part? (Round the final answer to the nearest cent.)
A.1.75
B. 0.75
C.1.23
D. 1.98

Added by Robert G.

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