Exhibit 22-3 Shasta Company Is Operating at Less Than Full

question 86

Multiple Choice

Exhibit 22-3 Shasta 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 2,000 units of the part for a total of $124,000.
Refer to Exhibit 22-3. If Shasta Company uses a differential-cost analysis in deciding whether to make the part, the total differential cost of making the part would be:

• A) $88,000
• B) $116,000
• C) $128,000
• D) $152,000

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Definitions:

Effortful Processing

A type of memory encoding that requires attention and conscious effort in order to maintain information in short-term memory or to encode it into long-term memory.

Sensory Memory

A very short-term form of memory that allows individuals to retain impressions of sensory information after the original stimulus has ceased.

Suggestive Interviewing

A technique in interviewing that may lead or influence individuals to recall events or details in a biased or particular way.

False Memory

A phenomenon where a person recalls something that did not happen or recalls it differently from the way it actually happened.