Crigui Music Produces 60,000 CDs on Which to Record Music

question 107

Multiple Choice

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 13,000 \\\text { Direct Labor } & 15,000 \\\text { Variable Overhead } & 3,000 \\\text { Fixed Overhead } & 7,000\end{array}$$ Crigui could avoid $4,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 60,000 units externally, what is the maximum external price that Crigui would expect to pay for the units?

• A)$34,000
• B)$31,000
• C)$38,000
• D)$35,000

---

Definitions:

Unjust Enrichment

A legal principle where one person benefits at another's expense without legal justification, prompting a remedy to correct the imbalance.

Mortgaged Property

Real estate or property whose ownership is conditional upon the repayment of a loan secured by the property itself.

Estate

An individual's net worth in the eyes of the law, encompassing all personal property, real property, and other assets.

Ungifted Cash

Cash that a person holds and has not been received as a gift.