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

Recognize the role of perception in decision-making and problem-solving.

Understand the influence of cultural norms and behaviors on international business practices.

Comprehend the conceptual framework of perception and perceptual errors in the context of interpersonal and business interactions.

Recognize different perceptual errors, including similarity error, contrast error, overweighting of negative information, first-impression error, race, gender, and age bias.

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Definitions:

Event

An occurrence or happening, often of significance and usually a distinct piece of time.

Certainty Equivalent

The guaranteed amount of money that an individual would view as equally desirable to a risky gamble.

Probability

A measure of the likelihood of a certain event or outcome, expressed as a number between 0 and 1.

Expected Utility Maximizer

An economic concept referring to individuals or entities that make choices under uncertainty to maximize their expected level of satisfaction or utility.