Olive Corp

question 31

Multiple Choice

Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are: An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?

• A) $32
• B) $36
• C) $40
• D) $44

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Definitions:

Utilitarian Organization

A profit or nonprofit organization that pays its employees salaries or wages.

Division of Labor

The allocation of different tasks and responsibilities to individuals or groups in a society, organization, or among nations to improve efficiency.

Ideal Type

Model rarely seen in reality but that defines the principal characteristics of a social form.

Hierarchy of Authority

An organizational structure where entities are ranked according to levels of power and authority, from highest to lowest.