Lancaster Company Currently Produces 10,000 Units of a Key Part

question 94

Multiple Choice

Lancaster Company currently produces 10,000 units of a key part at a total cost of $210,000.Variable costs are $170,000.Of the fixed cost, $10,000 relate specifically to this part.The remaining fixed costs are unavoidable. Another manufacturer has offered to supply the part for $190 per unit.The facilities currently used to manufacture the part could be used to manufacture a new product with an expected contribution margin of $25,000.Alternately, the facilities could be rented out at $55,000._____ is the opportunity cost to Lancaster Company for making the part.

• A)$20,000)
• B)$55,000
• C)$25,000
• D)$10,000)

Understand the strategic decisions involved in packaging and labeling products for different markets.

Appreciate the role of Universal Product Codes (UPC) and the benefits they provide to retail operations and inventory management.

Define and understand the concept of schemas and scripts.

Understand the fundamental characteristics and components of wisdom.

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Definitions:

Supply of Money

The total amount of money available in an economy at a specific time, including currency and deposits.

Value of Money

The purchasing power of monetary units, indicating how much goods or services one unit of money can buy; it generally decreases with inflation.

Money Demand

The desire of households and firms to hold cash for the purposes of transactions, precaution, and speculation.

Surplus of Money

Surplus of Money occurs when the supply of money in an economy exceeds the demand, potentially leading to lower interest rates and increased spending.