Answer the Questions That Follow,based on the Diagram Provided Below

question 38

Essay

Answer the questions that follow,based on the diagram provided below

a.What are the fixed costs for the make decision?
b.What is the breakeven quantity for the two options illustrated?
c.At Q = 500,would you choose the make or buy option? Why?
d.At Q = 100,what will be the total cost associated with the best decision at this quantity?

Recognize the differences between profit, cost, and investment centers in terms of responsibility and performance evaluation.

Understand the significance of transfer pricing and its implications on divisional performance.

Learn the computation of net operating income and its relevance in managerial accounting.

Grasp the importance of considering opportunity costs in setting transfer prices and evaluating performance.

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Definitions:

Two-part Tariff

A pricing strategy that involves a fixed fee plus a variable charge based on the amount of goods or services consumed.

Marginal Cost

The financial outlay for making an additional unit of a good or service.

Profit-maximizing

A strategy or process employed by firms aiming to achieve the highest possible profit by adjusting factors such as output, price, and input use.

Demand

Refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.