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

question 34

Multiple Choice

Bell's Shop can make 1,000 units of a necessary component with the following costs: The company can purchase the 1,000 units externally for $39,000. The unavoidable fixed costs are $2,000 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) $8,000
• B) $6,000
• C) $4,000
• D) Cannot be determined.

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Definitions:

Confidence Interval

A lineup of values, acquired through sample analysis, supposed to include the unascertained value of a population parameter.

Sample

A smaller group chosen from a larger population for the purposes of conducting surveys, observations, or interviews to gather data representative of the whole population.

Confidence Interval

A range of values, derived from sample data, that is believed to contain the true population parameter with a certain level of confidence.