Galley Industries Can Produce 100 Units of a Necessary Component

question 54

Multiple Choice

Galley Industries can produce 100 units of a necessary component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 20,000 \\\text { Direct Labor } & 9,000 \\\text { Variable Overhead } & 21,000 \\\text { Fixed Overhead } & 8,000\end{array}$$ If Galley Industries purchases the component externally, $2,000 of the fixed costs can be avoided. Below what external price for the 100 units would Galley choose to buy instead of make?

• A) $50,000
• B) $56,000
• C) $44,000
• D) $52,000

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Definitions:

Unemployment

The condition of being without a job despite actively looking for work.

Aggregate-Demand Curve

A curve that shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level

Trade-Off

A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect.

Inflation And Unemployment

Economic phenomena, with inflation being the rate at which the general level of prices for goods and services is rising, and unemployment representing the portion of the workforce that is not currently employed but actively seeking employment.