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:

Between-group Variance

Between-group variance measures the variability of group means around the overall mean, used in analyzing differences between groups.

F-ratios

Statistical values used in the analysis of variance (ANOVA) tests, indicating the ratio of variance between groups to the variance within groups.

Theoretical Distribution

A mathematical function that represents the probabilities of occurrence of different possible outcomes for an experiment.

F-ratio

A statistical measure used primarily in analysis of variance (ANOVA), calculated by dividing the variance between group means by the variance within the groups.