Lightning semiconductors produces 300,000 hi-tech computer chips per month. each chip uses a component that lightning makes in-house. the variable costs to make the component are $1.30 per unit, and the fixed costs are $1,200,000 per month. the company has been approached by a foreign producer who can supply the component, within acceptable quality standards, for $1.10 each. the fixed costs are unavoidable, and lightning would have no other use for the facilities currently employed in making the component. what would be the effect on operating income if the company decides to outsource?

Asmall town wants to build some new recreational facilities. the proposed facilities include a swimming pool, recreation center, basketball court and baseball field. the town council wants to provide the facilities which will be used by the most people, but they face budget and land limitations. the town has $400,000 and 14 acres of land. the pool requires locker facilities which would be in the recreation center, so if the swimming pool is built the recreation center must also be built. also, the council has only enough flat land to build the basketball court or the baseball field. the daily usage and cost of the facilities (in $1,000) are shown below. which facilities should they build? facilityusagecost ($1,000)landswimming pool4001002recreation center5002003basketball court3001504baseball field2001005