Use the Following Information for Questions
Ortiz Co If Ortiz Buys the Part from an Outside Supplier, $40,000

question 49

Multiple Choice

Use the following information for questions
Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production: $$\begin{array} { l r } \text { Direct materials } & \$ 55,000 \\\text { Direct labor } & 160,000 \\\text { Variable overhead } & 75,000 \\\text { Fixed overhead } & 175,000\end{array}$$ If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable.
-What is the relevant cost per unit of part A12E?

• A) $58
• B) $85
• C) $93
• D) $66

Understand the criteria for revenue recognition and its implications for financial reporting.

Recognize the effects of future returns and allowances on financial statements.

Understand the implications of selling receivables and the fair value option on financial statements.

Understand the distinction between variable (flexible) and fixed budgets and their respective roles in financial planning.

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Definitions:

Endosperm

Nutritive tissue in the seeds of flowering plants.

Nutrition

The process of providing or obtaining the food necessary for health and growth, including the study of nutrients and how the body utilizes them.

Photosynthesis

The process by which green plants and some other organisms use sunlight to synthesize nutrients from carbon dioxide and water, producing oxygen as a byproduct.

Cotyledons

The first leaves that appear from a germinating seed, providing energy to the young plant before true leaves develop.