The Cost to Produce Part a Was $20 Per Unit

question 135

Multiple Choice

The cost to produce Part A was $20 per unit in 2019. During 2020, it has increased to $23 per unit. In 2020, 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:

Sample

A subset of a population used for statistical analysis, selected for the purpose of making generalizations about the total population.

Estimated

An approximation or educated guess based on available data, rather than an exact measurement.

Test Statistic

A calculation, derived from sample data, used to determine the presence of a statistically significant difference between groups in hypothesis testing.

One-Sample Test

A statistical procedure used to determine whether a sample comes from a population with a specific characteristic.