Use the Following Information for Questions
Hermantic, Inc -If Hermantic, Inc

question 70

Multiple Choice

Use the following information for questions
Hermantic, Inc.can produce 100 units of a component part with the following costs:
$$\begin{array} { l c } \text { Direct Materials } & \$ 30,000 \\\text { Direct Labour } & 13,000 \\\text { Variable Overhead } & 32,000 \\\text { Fixed Overhead } & \mathbf { 2 2 , 0 0 0 }\end{array}$$
-If Hermantic, Inc.purchases the units externally for $80,000, by what amount will its total costs change? Fixed costs are not avoidable if they purchase externally.

• A)an increase of $80,000
• B)an increase of $5,000
• C)an increase of $17,000
• D)a decrease of $22,000

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Definitions:

Moles

A measure of quantity in chemistry that represents 6.022 x 10^23 particles of a substance.

Helium

Helium is an inert gas with the atomic number 2, notable for its low density, lack of color, odor, or taste, and for being the second lightest and second most abundant element in the observable universe.

KCl

Potassium chloride, a metal halide salt composed of potassium and chlorine, used in medicine, food processing, and scientific applications.

Moles

A chemical unit of measure that denotes an amount of substance containing approximately 6.022 x 10^23 particles.