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:

Learned Helplessness

is a condition in which a person suffers from a sense of powerlessness, arising from persistent failure to succeed or lack of control over their environment.

Seligman

A psychologist known for his work in positive psychology and studies on learned helplessness and optimism.

Cognitive Process

The mental activities related to thinking, understanding, learning, and remembering.

Reacting

The process of responding to stimuli or events in the environment.