Deer Currently Manufactures a Subcomponent That Is Used in Its

question 42

Essay

Deer currently manufactures a subcomponent that is used in its main product.A supplier has offered to supply all the subcomponents needed at a price of $12.Deer currently produces 80,000 subcomponents at the following manufacturing costs:
a.If Deer has no alternative uses for the manufacturing capacity,what would be the profit impact of buying the subcomponents from the supplier?
b.If Deer has no alternative uses for the manufacturing capacity,what would be the maximum price per unit they would be willing to pay the supplier?
c.Now assume Deer would avoid $120,000 in equipment leases and salaries if the subcomponent were purchased from the supplier.Now what would be the profit impact of buying from the supplier?

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Definitions:

Prejudice

Hostile or negative attitudes toward people in a distinguishable group, based solely on their membership in that group, often rooted in stereotypes and unfounded beliefs.

Realistic Conflict Theory

A social psychological model that explains intergroup conflicts, prejudice, and discrimination as resulting from actual competition between groups for desired resources.

Scarce Resources

Resources that are limited in availability and cannot satisfy all the demands placed on them by humans.

Prejudices

Preconceived opinions or attitudes held about individuals or groups without full knowledge or experience, often leading to unfair treatment.