Exhibit 22-2 JD Smith Company Is Operating at Less Than

question 74

Multiple Choice

Exhibit 22-2 JD Smith Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows:
Up to now, the company has been buying 3,000 units of the part for a total of $115,000.
Refer to Exhibit 22-2. If JD Smith uses a differential-cost analysis in deciding whether to make the part or buy the part, the total differential cost of making the part would be:

• A) $99,000
• B) $114,000
• C) $120,000
• D) $138,000

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Definitions:

Midwifery Care

Health services provided by midwives, focusing on pregnancy, childbirth, and the postpartum period, as well as reproductive and gynecological health.

Osteopathic Care

A branch of medical care that emphasizes the treatment of medical disorders through the manipulation and massage of the bones, joints, and muscles.

Acupuncturists

Health care professionals trained in the practice of acupuncture, an alternative medicine technique involving the insertion of needles into the body.

Chi

In traditional Chinese culture, the vital life force that flows through and is essential to health and vitality.