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Rzqust [24]
3 years ago
7

g A foreign factory has offered to supply with ready-made baskets for a price of $12 per basket. Assume that fixed costs are una

voidable, but that could use the vacated production facilities to earn an additional $8500 of profit per month. If Fruit Basket Company decides to outsource, monthly operating income will increase by ________.
Business
1 answer:
cluponka [151]3 years ago
4 0

Answer:

The answer is "$5500".

Explanation:

Analysis Differential:  

                                             Make                            Buy

Cost of variable                        800\times 7 \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ = 5600  

Fixed- cost                             16000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 16000

Purchasing cost                                                    800\times 12\ = 9600

Cost of opportunity            \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ 9500  

Total relevant cost                    31100 \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \  25600

Increasing operating income = 31100-25600 = 5500

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