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

question 92

Multiple Choice

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:. $$\begin{array} { l r } \text { Direct Materials } & \$ 13,000 \\\text { Direct Labor } & 15,000 \\\text { Variable Overhead } & 3,000 \\\text { Fixed Overhead } & 7,000\end{array}$$ None of Crigui's fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

• A) $38,000
• B) $34,000
• C) $35,000
• D) $42,000

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Definitions:

Contact Motive

A psychological need or drive to seek and maintain physical or emotional closeness with others.

Cloth "Mother"

A reference to Harry Harlow's experiments with rhesus monkeys, where he demonstrated the importance of caregiving and companionship in social and cognitive development.

Wire "Mother"

A term referring to an experiment by Harry Harlow, showing infant monkeys preferred a cloth surrogate mother over a wire one that provided food, highlighting the importance of comfort and security.

Harry Harlow

An American psychologist best known for his maternal-separation and social isolation experiments on rhesus monkeys, which highlighted the importance of caregiving and companionship.