Preston Industries, Inc

question 29

Multiple Choice

Preston Industries, Inc. currently manufactures part QX100, which is used in several products produced by the company. Monthly production costs for 10,000 units of QX100 are as follows:Accounting has estimated that 20% of the fixed overhead costs currently assigned to QX100 would not be needed if the company chose to purchase the part from an outside supplier. Preston currently has the option of purchasing the part from an outside supplier at $16.00 per unit.
If the company accepts the offer from the outside supplier, the monthly avoidable costs (that is, costs that would no longer be incurred) would be:

• A) $32,000
• B) $82,000
• C) $158,000
• D) $190,000
• E) $110,000

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Definitions:

Test Standardisation

The process of developing and administering tests in a consistent manner to ensure the reliability, validity, and fairness of the test across different test takers and contexts.

Psychological Test

An instrument designed to measure psychological variables such as personality, intelligence, or aptitude.

Types of Intelligence

Multiple theories exist identifying different forms of intelligence, such as linguistic, logical-mathematical, musical, and spatial.

Gardner

Gardner refers to Howard Gardner, an American developmental psychologist best known for his theory of multiple intelligences, which proposes that intelligence is not a single general ability but rather includes multiple, specific modalities.