Sharp Corporation Produces 8,000 Parts Each Year, Which Are Used

question 135

Multiple Choice

Sharp Corporation produces 8,000 parts each year, which are used in the production of one of its products. The unit product cost of a part is $36, computed as follows: The parts can be purchased from an outside supplier for only $28 each. The space in which the parts are now produced would be idle and fixed production costs would be reduced by one-fourth. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:

• A) $24,000
• B) ($24,000)
• C) $56,000
• D) ($56,000)

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Definitions:

Weekly Revenue

The total income generated from business activities or sales within a week.

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Linear Equations

Equations where the highest power of the variable is one, creating a straight line when graphed.

Elimination

In solving systems of equations, elimination involves adding or subtracting equations to remove one variable, making it easier to solve for the others.