Use the Following Information to Answer the Questions Below

question 52

Multiple Choice

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit. The annual fixed cost for this equipment is $50,000. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table) .

-Refer to the instruction above. What are total costs to make a quantity of 40,000 units per year?

• A) $400,000
• B) $450,000
• C) $800,000
• D) $850,000

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Definitions:

Vickrey Auction

A sealed-bid auction where the winner pays the second-highest bid instead of their own, encouraging true value bidding.

Highest Bidder

The person or entity willing to pay the most in a bidding process, typically in auctions.

Losing Bidders

Participants in an auction who submit bids but do not win the item or contract being auctioned.

Winning Bids

The highest offers made in an auction or tender process that secure the right to purchase goods or services.