Assume That There Is No Other Use for the Capacity

question 141

Multiple Choice

Assume that there is no other use for the capacity now being used to produce the component and the total fixed manufacturing overhead of the company would be unaffected by this decision.If Rogers Company purchases the components rather than making them internally,what would be the impact on the company's annual net operating income?

• A) $237,600 decrease.
• B) $81,000 decrease.
• C) $94,500 increase.
• D) $124,000 increase.

Understand the terminology used in inventory management, such as lot size, order quantity, and cycle inventory.

Comprehend the factors influencing the purchase price per unit and how economies of scale affect inventory management decisions.

Identify different types of costs associated with ordering and holding inventory.

Grasp the relationship between cycle inventory and flow time in the context of demand.

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Definitions:

Content Listening

The practice of focusing on and understanding the message's content in communication, rather than form or emotional aspects.

Critical Listening

The process of listening to, analyzing, and evaluating a message or piece of audio for its content, structure, and quality.

Personal Opinions

Individual beliefs or views held by a person, based on their own thoughts and experiences.

Business Meetings

Formal gatherings of individuals within an organization to discuss and make decisions on various matters.