The Manager of Hampton,Inc

question 115

Multiple Choice

The manager of Hampton,Inc.is trying to decide whether to make or buy a component of the product it sells.Which of the following costs and benefits is not relevant to the decision?

• A)Direct labor cost involved in making the component
• B)The purchase price of the component if it is bought
• C)Variable manufacturing overhead involved in making the component
• D)The selling price of the product

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Definitions:

Esterification

A chemical reaction that forms an ester through the reaction of a carboxylic acid and an alcohol.

Hydrolysis

A chemical reaction where water breaks down another compound, often resulting in the formation of two or more new compounds.

Spermaceti

A waxy substance found in the head cavity of the sperm whale, historically used in candles and ointments.

Potassium Hydroxide

A strong inorganic base with the formula KOH, used in various applications including as a cleaning agent, in the manufacture of biodiesel, and in the synthesis of other chemicals.