Scenario 12.1 You Currently Make a Part on Old Equipment at a at a Cost

question 16

Multiple Choice

Scenario 12.1
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. 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. The following table summarizes the details of this make versus buy decision.

-Use Scenario 12.1 to answer the question. What does the company save for the year by selecting the low-cost option at an annual requirement of 40,000 units?

• A) $150,000
• B) $300,000
• C) $50,000
• D) $40,000

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Definitions:

Reversal Design

An experimental design in behavioral research to determine the effects of a treatment by introducing, removing, and then reintroducing the treatment.

Irreversible Behaviors

Actions or patterns of activity that, once established, cannot be easily changed or undone.

Intervention Independence

The degree to which a person can maintain behavioral changes or improvements without continuous external support or intervention.

Graph Behavior

The representation of behavioral data visually on a graph to analyze trends, patterns, or changes over time.