Ruth Company Produces 1,000 Units of a Necessary Component with the Following

question 113

Multiple Choice

Ruth Company produces 1,000 units of a necessary component with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 34,000 \\\text { Direct Labor } & 15,000 \\\text { Variable Overhead } & 9,000 \\\text { Fixed Overhead } & 10,000\end{array}$$ Ruth Company could avoid $6,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would accept to acquire the 1,000 units externally?

• A)$58,000
• B)$64,000
• C)$59,000
• D)$62,000

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Definitions:

Dependency Theory

A perspective in international relations and economic development that examines how developed nations perpetuate the underdevelopment of developing nations through a dependence on the global capitalist system.

Former Colonies

Territories that were once governed and exploited by a foreign power but have since gained independence.

Dependency Theory

A theory in economics and political science that suggests countries can become dependent on more developed economies, resulting in a persistent state of underdevelopment.

Multinational Corporations

Large companies that operate and provide services or goods in multiple countries beyond their country of origin.