Tender Company Manufactures a Part for Its Production Cycle The Fixed Factory Overhead Costs Are Unavoidable

question 86

Multiple Choice

Tender Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 3 \\\text { Direct labor } & 5 \\\text { Variable factory overhead } & 4 \\\text { Fixed factory overhead } & \underline{2} \\\text { Total costs } & \$ 14\end{array}$ The fixed factory overhead costs are unavoidable. Assume that Tender Company has been offered 5,000 units of the part from another producer for $15 each. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Tender Company should:

• A) make the part to save $1 per unit
• B) make the part to save $3 per unit
• C) buy the part to save $3 per unit
• D) buy the part to save $1 per unit

---

Definitions:

Depression

A mental health disorder characterized by persistent feelings of sadness, loss of interest, and a lack of energy or enthusiasm.

Receptors

Protein molecules on the cell surface or within cells that bind to specific molecules like hormones, neurotransmitters, or drugs, triggering a response.

Anabolic Steroid

Class of synthetic hormones related to testosterone that have both muscle-building (anabolic) and masculinizing (androgenic) effects; also called anabolic–androgenic steroid.

Aggression

Behavior aimed at causing harm or intimidation to others, which can be physical or verbal, and is influenced by biological, psychological, and environmental factors.