Crigui Music Produces 60,000 CDs on Which to Record Music

question 127

Multiple Choice

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs: None of Crigui's fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

• A) $38,000
• B) $34,000
• C) $35,000
• D) $42,000

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Definitions:

Observer Effect

The observer effect refers to changes that the act of observation can make on a phenomenon being observed.

Representative Sample

A subset of a population that accurately reflects the members of the entire population.

Volunteer Bias

The distortion of research results due to differences between those who choose to participate in studies and those who do not.

Representative Sample

A portion of the population that correctly mirrors the characteristics of the whole population.