During 2021 It Cost Westa Inc

question 23

Multiple Choice

During 2021 it cost Westa Inc.$18 per unit to produce part T5.During 2022 it has increased to $21 per unit.In 2022 Southside Company has offered to provide Part T5 for $16 per unit to Westa.As it pertains to the make-or-buy decision which statement is true?

• A)Differential costs are $5 per unit.
• B)Incremental costs are $2 per unit.
• C)Net relevant costs are $2 per unit.
• D)Incremental revenues are $3 per unit.

---

Definitions:

Upward Sloping Yield Curve

A graph showing higher interest rates for longer-term debt compared to shorter-term debt, indicating investor anticipations of rising interest rates in the future.

Normal Curve

The normal curve, or normal distribution, is a bell-shaped curve that shows the probability distribution of a continuous random variable, where most occurrences take place near the mean.

Marginal Investor

An investor whose actions might influence the market price of a security and who is typically sensitive to changes in risk levels or return.

Required Rate

The minimum return an investor expects to achieve by investing in a particular asset, also known as the required rate of return.