Ruth Company Produces 1,000 Units of a Necessary Component with the Following

question 66

Multiple Choice

Ruth Company produces 1,000 units of a necessary component with the following costs: None of Ruth Company's fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $8,000 if the components were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would be willing to accept to acquire the 1,000 units externally?

• A) $43,000
• B) $55,000
• C) $48,000
• D) $52,000

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Definitions:

Mislaid Property

Items that the owner has intentionally placed somewhere but then forgotten, differentiating from lost or abandoned property.

Abandoned Property

Property that has been discarded by its owner, who has given up all right, title, and interest in it.

Valid Gift

A gift that meets all legal requirements to be considered legally effective, typically involving a clear intention to give, acceptance by the recipient, and delivery of the gift.

Delivery

The process of transferring goods from one party to another, completing the sale or fulfilling a term in a contract.