Scenario 2.6 You Currently Purchase a Part Used in Your Production Process

question 49

Multiple Choice

Scenario 2.6
You currently purchase a part used in your production process from an outside supplier, and have decided to begin making this part in-house. You have two equipment options for moving production in-house: special-purpose equipment and general-purpose equipment. Cost information for these two options is as follows:

-Use Scenario 2.6 to answer this question. What are total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units?

• A) $400,000
• B) $500,000
• C) $800,000
• D) $850,000

---

Definitions:

Common Stock

Equity ownership in a corporation, with rights to share in its profits and vote in company matters.

Comprehensive Income

The change in equity of a company during a period from transactions and other events from non-owner sources.

Equity

The portion of a company's assets that belongs to the shareholders after debts and liabilities have been settled.

Non-Owner Sources

Non-Owner Sources refer to funds sourced from entities other than the owners, such as loans, creditor financing, or any external investments into the business.