The Cost to Produce Part a Was $20 Per Unit

question 104

Multiple Choice

The cost to produce Part A was $20 per unit in 2016.During 2017, it has increased to $23 per unit.In 2017, Supplier Company has offered to supply Part A for $18 per unit.For the make-or-buy decision,

• A)incremental revenues are $5 per unit.
• B)incremental costs are $3 per unit.
• C)net relevant costs are $3 per unit.
• D)differential costs are $5 per unit.

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Definitions:

Total Compensation

The complete reward package offered to an employee, including salary, bonuses, benefits, and any other financial or non-financial perks.

Current Liabilities

Financial obligations that a company is required to pay within a year, including accounts payable, short-term loans, and other short-term debts.

Past Transactions

Previous financial activities or exchanges that have occurred in an entity's history.

Future Payments

The amounts of money obligated to be paid at future dates for goods or services received or for debt repayment.