Galley Industries Can Produce 500 Units of a Necessary Component

question 68

Multiple Choice

Galley Industries can produce 500 units of a necessary component part with the following costs: $$\begin{array} { l c } \text { Direct Materials } & \$ 75,000 \\\text { Direct Labour } & 20,000 \\\text { Variable Overhead } & 60,000 \\\text { Fixed Overhead } & 10,000\end{array}$$ If Galley Industries purchases the component externally, $3,000 of the fixed costs can be avoided.Below what external price for the 500 units would Galley choose to buy instead of make?

• A)$95,000
• B)$165,000
• C)$155,000
• D)$158,000

Understand the concept and importance of stress management and wellness programs in organizations.

Identify and analyze physical, task, role, and interpersonal demands as stressors in the workplace.

Comprehend the role, regulations, and impact of the Occupational Safety and Health Administration (OSHA) on workplace safety.

Recognize the importance of safety engineering and strategies for preventing workplace accidents and promoting a safety culture.

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Definitions:

Average Accounting Return

A measure of investment profitability calculated as the average annual net earnings of a project divided by the average investment in the project.

Straight-Line Method

An accounting method for allocating the cost of an asset evenly over its useful life.

Cost of Capital

The obligatory profit percentage a corporation needs to achieve on its investments to keep its market share and attract investors.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments, representing the discount rate that makes the net present value (NPV) of all cash flows equal to zero.