A supplier has offered to sell the component to Carver for per unit. If Carver buys the component from the supplier, the released facilities can be used to manufacture a product that would generate a contribution margin of annually. Assuming that Carver needs components annually and that the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if Carver outsources?

A. Operating income would decrease by $100,000

Explanation:

The computation of the impact on operating income if Carver outsources is shown below:-

Particulars                    Per unit             3,000 units

                                Make     Buy       Make          Buy

Direct material         410                  1,230,000  

Direct labor              110                   330,000  

Variable manufacturing

overhead                  90                  270,000  

Opportunity cost                              20,000

Purchase cost                      650                          1,950,000

Total cost                                       1,850,000      1,950,000

Operating income would decrease

= $1,950,000 - $1,850,000

= $10,000

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answer; capital structure decision;