The Cost to Produce Part a Was $5 Per Unit

question 65

Multiple Choice

The cost to produce Part A was $5 per unit in 2015.During 2016, it has increased to $8 per unit.In 2016, Supplier Company has offered to supply Part A for $6 per unit.For the make-or-buy decision,

• A)incremental revenues are $1 per unit.
• B)incremental costs are $3 per unit.
• C)net relevant costs are $3 per unit.
• D)differential costs are $2 per unit.

---

Definitions:

Carbon Dioxide

This gas is characterized by its lack of color and smell, coming from the burning of organic compounds and carbon, and from respiratory activities. It's naturally part of the ambient air and crucial for the photosynthesis process in plants.

Hydrochlorofluorocarbons

Compounds used as refrigerants, solvents, and blowing agents, less damaging to the ozone layer than CFCs but still concerning for global warming.

Nitrous Oxide

A colorless gas with a slightly sweet odor, used as a sedative and analgesic in dentistry and surgery, and also known for its contribution to greenhouse gas emissions.

Surface Ozone

A layer of ozone in the lower atmosphere acting as a pollutant harmful to humans and vegetation.