Lawson Company Produces a Part That Has the Following Costs

question 73

Multiple Choice

Lawson Company produces a part that has the following costs per unit: Crest Corporation can provide the part to Lawson for $19 per unit. Lawson Company has determined that 60 percent of its fixed overhead would continue if it purchased the part. However, if Lawson no longer produces the part, it can rent that portion of the plant facilities for $60,000 per year. Lawson Company currently produces 10,000 parts per year. Which alternative is preferable and by what margin?

• A) Make-$20,000
• B) Make-$50,000
• C) Buy-$10,000
• D) Buy-$40,000

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Definitions:

Empathy

The ability to understand and share the feelings of another, often leading to compassionate understanding and actions.

Diverse Lifestyles

The variety of ways in which individuals or groups live their lives, reflecting differences in values, practices, cultures, and social norms.

Cultural Sensitivity

The awareness and appreciation of cultural differences and similarities, and the incorporation of this understanding into one's behaviors, attitudes, and practices.

Cultural Influences

The effects that the values, beliefs, and practices of a culture have on individuals' behaviors, attitudes, and perceptions.