Elly Industries Is a Multi-Product Company That Currently Manufactures 30,000

question 101

Multiple Choice

Elly Industries is a multi-product company that currently manufactures 30,000 units of part MR24 each month for use in production of its products. The facilities now being used to produce part MR24 have a fixed monthly cost of $150,000 and a capacity to produce 35,000 units per month. If Elly were to buy part MR24 from an outside supplier, the facilities would be idle, but its fixed costs would continue at 40% of their present amount. The variable production costs of Part MR24 are $11 per unit.If Elly Industries continues to use 30,000 units of part MR24 each month, it would realize a financial advantage by purchasing this part from an outside supplier only if the supplier's unit price is less than:

• A) $14 per unit
• B) $11 per unit
• C) $16 per unit
• D) $13 per unit

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Definitions:

Broad Array

A wide and diverse range of items or elements, often used to describe a comprehensive selection of products, services, or choices.

Differentiation Focus Strategy

A competitive approach where a business targets a specific segment of the market and offers unique features that appeal to that niche.

Cost Leadership Strategy

A competitive strategy where a company aims to become the lowest cost producer in the industry, offering its products or services at a lower price than competitors.

Differentiation Strategy

A marketing approach where a company makes its product or service stand out from competitors through distinct features, quality, or services.