Crigui Music Produces 60,000 CDs on Which to Record Music

question 6

Multiple Choice

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 13,000 \\\text { Direct Labor } & 15,000 \\\text { Variable Overhead } & 3,000 \\\text { Fixed Overhead } & 7,000\end{array}$$ Crigui could avoid $4,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 60,000 units externally, what is the maximum external price that Crigui would expect to pay for the units?

• A) $34,000
• B) $31,000
• C) $38,000
• D) $35,000

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Definitions:

Settling Point

A theory in biology and physiology suggesting that body weight is regulated around a genetically predetermined 'settle point'.

Weight-Loss Diets

Eating plans often designed to reduce calorie intake, resulting in body weight loss.

Calorie Maintenance

The balance of calories consumed through eating and drinking with calories burned through physical activity, which is crucial for maintaining current body weight.

Dieting

The practice of eating food in a regulated manner to achieve or maintain a specific weight or health goal.