Fornelli, Inc - If Fornelli, Inc

question 138

Multiple Choice

Fornelli, Inc.can produce 100 units of a component part with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 15,000 \\\text { Direct Labor } & 6,500 \\\text { Variable Overhead } & 16,000 \\\text { Fixed Overhead } & 11,000\end{array}$$
- If Fornelli, Inc.can purchase the units externally for $40,000, by what amount will its total costs change?

• A)An increase of $40,000
• B)An increase of $2,500
• C)An increase of $8,500
• D)A decrease of $11,000

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Definitions:

Marketing Strategy

An organization's comprehensive plan to reach and attract customers to buy its product or service, encompassing market research, target markets, marketing mix, and budget allocation.

Cost Trade-offs

The compromise between different factors typically involving cost in exchange for some other benefit, such as speed, quality, or performance.

Logistics System

involves the detailed coordination of complex operations involving people, facilities, and supplies, in distributing products or services.

Emotional Infidelity

Forming a significant emotional connection with someone outside one’s committed relationship, considered a form of betrayal.