Burt Company Currently Produces 10,000 Units of a Key Part

question 34

Multiple Choice

Burt Company currently produces 10,000 units of a key part at a total cost of $210,000. Variable costs are $170,000. Of the fixed cost, $10,000 relate specifically to this part. The remaining fixed costs are unavoidable. Another manufacturer has offered to supply the part for $190 per unit. The facilities currently used to manufacture the part could be used to manufacture a new product with an expected contribution margin of $25,000. Alternately, the facilities could be rented out at $55,000. is the opportunity cost to Burt Company for making the part.

• A) ($20,000)
• B) $25,000
• C) $55,000
• D) ($10,000)

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Definitions:

Need for Power

A motivational drive to influence, control, or have authority over others.

Job Satisfaction

The level of contentment employees feel regarding their job, which can influence their motivation, performance, and retention.

Herzberg's Two-Factor Theory

A motivation theory that suggests there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction.

Influence Factors

Various elements or forces that affect individuals' behavior, decisions, attitudes, and performance within an organizational context.