The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the total fixed costs incurred in producing the part can be eliminated. The annual increase or decrease on the company's operating incomes as a result of buying the part from the outside supplier would be:

$2,000 Decrease

Explanation:

Calculation to determine what The annual increase or decrease on the company's operating incomes as a result of buying the part from the outside supplier would be:

First step is to calculate C saving from not producing parts

C saving from not producing parts = $12 + (2/3 x $9)

C saving from not producing parts = $18

Now let determine The annual increase or decrease on the company's operating incomes

purchase price = $20

Annual increase or decrease =($20-$18) x 1,000

Annual increase or decrease =$2 more per unit x 1,000

Annual increase or decrease = $2,000 decrease

Therefore The annual increase or decrease on the company's operating incomes as a result of buying the part from the outside supplier would be:$2,000 Decrease

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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