Green Manufacturing Makes 30,000 Units Per Year of a Part

question 84

Multiple Choice

Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder.An outside supplier has offered to sell Green all of these parts for $48 a unit.If the parts were purchased from the supplier,all of the direct labor costs would be avoided as well as $5 of manufacturing overhead costs per unit.Product cost information for the part under review follows: If Green has no other use for the space vacated by the decision to purchase the part from the outside supplier,what is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?

• A) $210,000.
• B) $60,000.
• C) ($210,000).
• D) ($90,000)

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Definitions:

Large Producers

Entities that produce goods or services at a high volume, often dominating the market or industry sector they operate within.

Pure Competition

A term synonymous with purely competitive industry, denoting a market scenario where numerous firms offer identical products, ensuring no singular entity can control the market price.

Monopolistic Competition

A market structure where many firms sell similar but not identical products, allowing for some degree of market power.

Oligopoly

A market structure characterized by a small number of firms that have significant control over market prices and where strategic interactions between the firms play a crucial role.