The Cost to Produce Part a Was $20 Per Unit

question 30

Multiple Choice

The cost to produce Part A was $20 per unit in 2013 and in 2014 it has increased to $22 per unit. In 2014, Supplier ABC has offered to supply Part A for $18 per unit. For the make-or-buy decision ________.

• A) incremental revenues are $4 per unit
• B) incremental costs are $2 per unit
• C) net relevant costs are $2 per unit
• D) differential costs are $4 per unit

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Definitions:

Executive Orders

Directives issued by the President of the United States or a state governor, having the force of law, aimed at managing governmental operations and officials.

World Trade Organization

An international organization that regulates international trade with the aim of ensuring that trade flows as smoothly, predictably, and freely as possible.

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The process of discussing things to reach a mutual agreement, especially in business or diplomatic conversations.

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Conflicts that arise between countries or parties due to differences in trade policies, tariffs, or barriers to the free exchange of goods and services.