Fornelli, Inc If Fornelli, Inc

question 90

Multiple Choice

Fornelli, Inc. can produce 100 units of a component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 15,000 \\\text { Direct Labor } & 6,500 \\\text { Variable Overhead } & 16,000 \\\text { Fixed Overhead } & 11,000\end{array}$$ If Fornelli, Inc. can purchase the units externally for $40,000, by what amount will its total costs change?

• A)An increase of $40,000
• B)An increase of $2,500
• C)An increase of $8,500
• D)A decrease of $11,000

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Definitions:

Perceptual Biases

Cognitive biases that affect the interpretation and judgment of sensory information, leading to skewed perceptions and potentially erroneous conclusions.

Social Biases

The systematic tendency to process social information in a way that favors particular outcomes or interpretations based on personal, cultural, or societal preferences.

Interpretive Efficiency

The ability to quickly and accurately understand or make sense of information and situations.

Fundamental Attribution Error

The tendency for people to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing situational explanations.