Use the Following Information for Questions
Hermantic, Inc -If Hermantic, Inc

question 17

Multiple Choice

Use the following information for questions
Hermantic, Inc.can produce 100 units of a component part with the following costs:
$$\begin{array} { l c } \text { Direct Materials } & \$ 30,000 \\\text { Direct Labour } & 13,000 \\\text { Variable Overhead } & 32,000 \\\text { Fixed Overhead } & \mathbf { 2 2 , 0 0 0 }\end{array}$$
-If Hermantic, Inc.can purchase the component externally for $88,000 and only $8,000 of the fixed costs can be avoided, what is the correct "make-or-buy decision"?

• A)Make and save $1,000.
• B)Buy and save $1,000.
• C)Make and save $5,000.
• D)Buy and save $13,000.

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Definitions:

Communication Barrier

Any obstacle that impedes the conveyance and reception of messages between individuals.

Interpreted Correctly

The accurate understanding or explanation of a message, statement, or piece of information as it was intended.

Intellectualization

A defense mechanism where reasoning is used to block confrontation with an unconscious conflict and its associated emotional stress.

Emotional Conflicts

Internal struggles that occur when a person experiences opposing emotions or desires, often leading to stress or psychological discomfort.