A Company Makes and Sells a Range of Products

question 30

Multiple Choice

A company makes and sells a range of products. The standard details per unit for one of these products, product X, are as follows. 11ec37eb_8baf_0d65_97b9_dbf4e7f6ef95__00 To meet sales demand, the company must obtain 2,000 units of product X next month. There is sufficient labour capacity to produce 1,500 of these units in-house during normal time. However, any production above this level would require overtime working which would be paid at a premium of 50%. The company can buy as many units of product X as it wishes next month from an external supplier at a price of $120 per unit. What is the total financial benefit to the company of purchasing the appropriate number of units from the external supplier rather than producing them in-house?

• A) $20,000
• B) $30,000
• C) $27,500
• D) $5,000

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Definitions:

Empiricism

A theory in epistemology that states knowledge comes only or primarily from sensory experience.

Observations

The act of monitoring or recording systematically selected variables or behaviors in research to gather data.

Assumption

A statement taken for granted or accepted as true without proof, used as a basis for reasoning or argument.

Quantitative Research

A research method focusing on obtaining data that can be quantified and analyzed statistically to draw conclusions and test hypotheses.