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.
Based solely on a short-run financial analysis, the maximum price that Preston should be willing to pay the outside vendor for each unit of QX100 is:
Definitions:
Facial Feedback
The theory that sensory feedback from our facial expressions can affect our mood and emotions.
Emotional Decisions
Choices made based on feelings and emotions rather than logical analysis, often influenced by personal biases and subjective experiences.
Vice President
An official or executive ranking below the president of a country or organization, often tasked with specific duties or acting in the president's absence.
Hans Selye
A scientist known for his research on the effects of stress on the human body and for formulating the General Adaptation Syndrome model.
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