Olive Corp

question 28

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.If Olive Corp.rejects the outside offer,what will be the effect on short-term profits?

• A)$80,000 increase
• B)no change
• C)$160,000 decrease
• D)$80,000 decrease

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Definitions:

Expected Rate

In finance, it refers to the return anticipated on an investment or the interest rate at which money is borrowed or lent.

Risk-Free Asset

An investment that is expected to deliver guaranteed returns with no risk of financial loss.

Expected Rate

A projection or estimate of the rate of return on an investment or the growth rate of an economic variable in the future.

Standard Deviation

A statistical metric that quantifies the spread or variability among a collection of values, representing the extent of dispersion within the data set.