Cleese Company Currently Purchases a Finished Part from Idle Company

question 19

Multiple Choice

Cleese Company currently purchases a finished part from Idle Company, but is considering using it excess capacity to make the part. Normal capacity is 20,000 hours, but Cleese is currently running at 17,000 hours. Details about budgeted factory overhead follow: The relevant unit cost Cleese should use to decide whether to make or buy the part is:

• A)$31.00
• B)$24.50
• C)$27.00
• D)$26.00

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Definitions:

Indirectly

In a way that is not directly expressed or done; an indirect method or approach.

Null Hypotheses

A statement used in statistics that proposes there is no significant difference or relationship between specified populations, or no effect of a particular treatment.

Sample

A subset of a population selected for observation and analysis in order to make inferences about the entire population.

Well-written Hypothesis

A clearly formulated statement that makes a conjecture about the outcome of an experiment or research, specifying the expected relationship between variables.