SP Company Makes 40,000 Motors to Be Used in the Production

question 45

Multiple Choice

SP Company makes 40,000 motors to be used in the production of its sewing machines.The average cost per motor at this level of activity is: An outside supplier recently began producing a comparable motor that could be used in the sewing machine.The price offered to SP Company for this motor is $18.If SP Company decides not to make the motors,there would be no other use for the production facilities and total fixed factory overhead costs would not change.If SP Company decides to continue making the motor,how much higher or lower would net income be than if the motors are purchased from the outside suppler? Assume that direct labour is a variable cost in this company.

• A) $86,000 higher.
• B) $92,000 lower.
• C) $178,000 higher.
• D) $276,000 higher.

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Definitions:

Person-Centered Therapist

A mental health professional who employs Rogers' approach focusing on creating a supportive environment that encourages the individual to lead the process of self-discovery and growth.

Valuing Process

The cognitive and emotional process of assessing the importance and significance of one's beliefs, actions, and experiences.

Internalized Values

Values and norms that an individual adopts from society or particular culture, which then guide their behavior and decisions.

Person-centered Therapy

A therapeutic approach that emphasizes the importance of viewing the client as the central focus of therapy, with innate abilities for self-growth.