Ruth Company Produces 1000 Units of a Necessary Component with the Following

question 34

Multiple Choice

Ruth Company produces 1000 units of a necessary component with the following costs: $$\begin{array} { l r } \text { Direct Materials } & \$ 27,000 \\\text { Direct Labor } & 16,000 \\\text { Variable Overhead } & 4,000 \\\text { Fixed Overhead } & 7,000\end{array}$$ None of Ruth Company's fixed overhead costs can be reduced but another product could be made that would increase profit contribution by $8000 if the components were acquired externally.If cost minimization is the major consideration and the company would prefer to buy the components what is the maximum external price that Ruth Company would be willing to accept to acquire the 1000 units externally?

• A)$46000
• B)$58000
• C)$51000
• D)$55000

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Definitions:

Chiral Molecule

A molecule that cannot be superimposed on its mirror image, often possessing a stereocenter.

Enantiomer

One of two mirror-image forms of a chiral molecule, which cannot be superimposed on each other, similar to left and right hands.

Superimposable

A term used to describe two objects, such as molecules, that can be placed on top of each other in such a way that all parts align perfectly and are indistinguishable.

Chiral

Describes a molecule that has non-superimposable mirror images, often resulting in molecules with different optical activities.