Sharp Corporation Produces 8,000 Parts Each Year, Which Are Used

question 167

Multiple Choice

Sharp Corporation produces 8,000 parts each year, which are used in the production of one of its products. The unit product cost of a part is $36, computed as follows: The parts can be purchased from an outside supplier for only $28 each. The space in which the parts are now produced would be idle and fixed production costs would be reduced by one-fourth. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:

• A) $24,000
• B) ($24,000)
• C) $56,000
• D) ($56,000)

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Definitions:

Internal Situation

Refers to the conditions and factors within an organization that influence its operations, such as employee morale, financial health, and operational efficiency.

External Situation

Factors outside an organization that can affect its performance, including economic conditions, competition, and legal constraints.

Scanning the Situation

The process of carefully examining and assessing the current state or conditions of an environment or situation to identify key elements and challenges.

Forecasting

Forecasting involves making predictions about future events or trends based on current and historical data analysis.