Houston Corporation Manufacturers a Part for Its Production Cycle

question 5

Multiple Choice

Houston Corporation manufacturers a part for its production cycle.The costs per unit for 5,000 units of this part are as follows: Johnson Company has offered to sell Houston Corporation 5,000 units of the part for $112 per unit.If Houston Corporation accepts Johnson Company's offer,total fixed costs will be reduced to $60,000.What alternative is more desirable and by what amount is it more desirable?
Alternative Amount

• A)Make $ 20,000
• B)Make $120,000
• C)Buy $ 40,000
• D)Buy $100,000

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Definitions:

IQ

An abbreviation for Intelligence Quotient, a measure of a person's intellectual capabilities in relation to their age group.

Heredity

The passing of traits from parents to their offspring, either through asexual reproduction or sexual reproduction.

Cultural Bias

The tendency to interpret or judge human behavior and cultures based on the norms and values of one's own culture.

Intelligence Testing

The process of measuring a person's cognitive abilities, aptitudes, and intellectual potential through standardized tests.