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:

Violating

The act of breaking or failing to comply with a rule, agreement, or law.

Interlocking Relationships

A situation where members of a company's board of directors are also members of the board of another company, potentially leading to conflicts of interest or anticompetitive practices.

Common Good

refers to what is beneficial or advantageous to all members of a given community or society, encompassing values, policies, and practices that prioritize the welfare of the collective over individual interests.

General Framework

A broad overview or outline of a structured plan or system that guides the development or analysis of a project.