Used in the production of dehumidifiers at Pollock Corporation. The following costs and data relate to the production of Part P40
Number of parts produced annually 25.000
Fixed costs $42,000
Variable costs $70,000
Total cost to produce $112.000
Pollock Corporation can purchase the part from an outside supplier for 54 48 per unit. If they purchase from the outside supplier, 50% of the foxed costs would be avoided. 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 $2,300 profit. If the company makes the part, what will its operating income be?
A. $18,700 greater than if the company bought the part
B. $130,700 greater than if the company bought the part
C. $23,300 greater than if the company bought the part
D. $16,700 less than if the company bought the part