Suppose That You Can Either Buy a Radio from a Firm

question 81

Multiple Choice

Suppose that you can either buy a radio from a firm for $50 or find and purchase the components yourself and then either assemble them yourself or hire someone to do so.You should

• A)buy the radio because it's possible to do so
• B)assemble the radio yourself because it's possible to do so
• C)assemble the radio yourself only if you know how to do so
• D)assemble the radio yourself only if the total price of all the components is less than $50
• E)assemble the radio yourself only if the total price of all the components plus the value of your own time is less than $50

---

Definitions:

Direct Cost

Expenses that can be directly traced to producing specific goods or services, such as raw materials and direct labor.

Indirect Cost

Costs not directly traceable to a specific product or project, such as utilities or rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profits.

Direct Manufacturing Cost

Costs that are directly attributable to the production of a specific product, including direct materials and direct labor.