The Matt Truck Corp

question 6

Multiple Choice

The Matt Truck Corp. is considering whether to continue to make steering wheels for its trucks, or whether to buy the steering wheels from an outside supplier. It can buy the gears from outside suppliers at $190 per unit. It needs 50,000 units each year. The company has the following manufacturing costs: raw materials = $130 per unit; direct labor = $20 per unit; variable overhead = $30 per unit; avoidable fixed costs of $200,000 per year and non-avoidable fixed costs of $500,000 per year. The e

• A) Decrease profits by $300,000
• B) Decrease profits by $200,000
• C) Increase profits by $200,000
• D) Increase profits by $300,000

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Definitions:

Price Level

A general average of the ongoing prices for goods and services within the economic sector.

Foreign-Currency Exchange

The process by which individuals and entities convert currency from one country's currency into another, understanding the dynamic exchange rates between currencies.

Fed

The Federal Reserve System, which is the central bank of the United States, responsible for monetary policy and financial oversight.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash and deposits.