Bell's Shop Can Make 1,000 Units of a Necessary Component

question 210

Multiple Choice

Bell's Shop can make 1,000 units of a necessary component with the following costs:
Direct Materials $72,000
Direct Labor 18,000
Variable Overhead 9,000
Fixed Overhead ?
The company can purchase the 1,000 units externally for $117,000. The avoidable fixed costs are $6,000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the fixed overhead costs of making the component?

• A) $24,000
• B) $18,000
• C) $12,000
• D) Cannot be determined.

---

Definitions:

Middle-income Households

Families or living units with income levels that fall in the middle range of the overall income distribution, often defined by economic researchers.

Per Capita Income

The average income earned per person in a given area or country, calculated by dividing the total income of the area by its population.

Exchange Rates

The worth of one currency when converted into another.

Global Companies

Businesses that operate in multiple countries across the world, facing a wide range of economic, cultural, and regulatory environments.