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

question 82

Multiple Choice

Deuce Company currently produces 10,000 units of a key part at a total cost of $512,000. Variable costs are $300,000. Of the fixed cost, $140,000 relate specifically to this part. The remaining fixed costs are unavoidable. Another manufacturer has offered to supply the part for $48 per unit. The facilities currently used to manufacture the part could be used to manufacture a new product with an expected contribution margin of $30,000. Alternately, the facilities could be rented out at $60,000. Given all of these alternatives, is Deuce Company's lowest net cost per unit for the part.

• A) $42
• B) $48
• C) $44
• D) $30

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Definitions:

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a handbook used by healthcare professionals as a guide to diagnose mental disorders.

Psychological Disorders

Conditions involving aberrant thinking, emotion, or behavior, distressing to the individual, and often impair day-to-day functioning; also known as mental disorders.

Classify

The act of organizing or sorting things into categories based on shared characteristics or criteria.

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a comprehensive classification system for psychiatric disorders.