Zouar Computer Corporation Currently Manufactures the Disk Drives That It

question 340

Multiple Choice

Zouar Computer Corporation currently manufactures the disk drives that it uses in its computers. The costs to produce 5,000 of these disk drives last year were as follows: Kidal Electronics has offered to provide Zouar with all of its disk drive needs for $27 per drive. If Zouar accepts this offer, Zouar will be able to use the freed up space to generate an additional $40,000 of income each year to produce more of its computer keyboards. Only $3 per drive of the fixed manufacturing overhead cost above could be avoided. Direct labor is an avoidable cost in this decision. Based on this information, would Zouar be financially better off making the drives or buying the drives and by how much?

• A) $15,000 better to buy
• B) $20,000 better to buy
• C) $35,000 better to buy
• D) $60,000 better to make

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Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Treatment Alcoholism

Various therapeutic methods aimed at helping individuals overcome dependence on alcohol, including counseling, medication, and support groups.

Unpleasant Stimuli

External factors or events that can cause discomfort or negative reactions in an individual.

Alcohol Use Disorder

A medical condition characterized by an inability to manage drinking habits, leading to significant impairment or distress.