Floyd Company Produces a Part That Is Used in the Manufacture

question 75

Multiple Choice

Floyd Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 108,000 \\\text { Direct labor } & 156,000 \\\text { Variable factory overhead } & 72,000 \\\text { Fixed factory overhead } & \underline{168,000} \\\text { Total costs } & \underline{\$ 504,000} \\\end{array}$ Of the fixed factory overhead costs, $72,000 is avoidable. Assume that Floyd Company can buy 5,000 units of the part from another producer for $105.60 each. The facilities currently used to make the part could be rented out to another manufacturer for $72,000 a year. Floyd Company should:

• A) buy the part to save the company $72,000
• B) make the part to save the company $24,000
• C) buy the part to save $14.40 per unit
• D) make the part to save $19.20 per unit

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Definitions:

Clinical Observations

The systematic collection and analysis of patient data to understand and monitor their condition in a clinical setting.

Psychodynamic Processes

Psychological activities and mechanisms underlying human behavior and feelings, often focused on the influence of the unconscious mind.

Theoretical Models

Conceptual frameworks used to understand, explain, and make predictions about a particular domain of interest.

Freud's Theory

A set of psychoanalytic theories developed by Sigmund Freud, emphasizing unconscious motivations and conflicts as determinants of human behavior.