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:

Shares

Portions of ownership in a corporation.

Date Of Record

A specific date set by a company on which the shareholders of record are entitled to receive a dividend or other distribution.

Dividend

A payment made by a corporation to its shareholders, usually derived from profits.

Stock Owners

Individuals or entities that hold shares of stock in a corporation, representing partial ownership of that corporation.