A Firm Is Currently Buying a Part at a Cost

question 49

Multiple Choice

A firm is currently buying a part at a cost of $12 each. It is considering buying a machine that will produce the part at a variable cost of $8. Each unit of input produces the part plus a by-product, which is sold for $1. The machine will cost $40,000 and will have a useful life of 5 years. The firm requires an 8% return. What annual volume is necessary to justify making the investment? Ignore income taxes.

• A) 2,558 units
• B) 3,198 units
• C) 12,792 units
• D) 8,000 units

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Definitions:

Avoidant-Fearful Attachment

A pattern of attachment in which individuals feel unworthy of love and are wary of getting close to others.

Financial Security

The state of having stable income or resources to support a standard of living now and in the foreseeable future.

Sexual Compatibility

The extent to which partners share similar preferences, desires, and expectations regarding sexual activities and intimacy.

Anxious-Ambivalent

A type of attachment style characterized by intense emotional dependence and insecurity in relationships, often needing reassurance and fearing abandonment.