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Business, 20.08.2019 21:00 anahitrejo1

Sierra semiconductors produces 200 comma 000 highminustech computer chips per month. each chip uses a component that sierra makes inminushouse. the variable costs to make the component are $ 1.40 per unit, and the fixed costs are $ 1 comma 300 comma 000 per month. the company has been approached by a foreign producer who can supply the component, within acceptable quality standards, for $ 1.00 each. if the company chooses to outsource, fixed costs can be reduced by 30%. there are no other uses for the facilities currently employed in making the component. what would be the effect on operating income, if the company decides to outsource?

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