Fornelli, Inc If Fornelli, Inc

question 49

Multiple Choice

Fornelli, Inc.can produce 100 units of a component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 15,000 \\\text { Direct Labor } & 6,500 \\\text { Variable Overhead } & 16,000 \\\text { Fixed Overhead } & 11,000\end{array}$$ If Fornelli, Inc.can purchase the units externally for $40,000, by what amount will its total costs change?

• A)An increase of $40,000
• B)An increase of $2,500
• C)An increase of $8,500
• D)A decrease of $11,000

---

Definitions:

Behavioral Segmentation

The process of dividing a market into groups based on consumer behaviors and patterns.

Consumer Markets

A sector where businesses sell products or services directly to individuals for private and household use, creating demand for various goods.

Behavioral Characteristics

Attributes that describe patterns of action and reaction of individuals or groups, often used in studying consumer behavior, employee performance, and social interactions.

Demographic Segmentation

The process of dividing a market into segments based on demographic factors such as age, gender, income, education, or ethnicity.