Regis Company Manufactures Plugs at a Cost of $36 Per

question 57

Multiple Choice

Regis Company manufactures plugs at a cost of $36 per unit, which includes $8 of fixed overhead. Regis needs 30,000 of these plugs annually (as part of a larger product it produces) . Orlan Company has offered to sell these units to Regis at $33 per unit. If Regis decides to purchase the plugs, $60,000 of the annual fixed overhead cost will be eliminated, and the company may be able to rent the facility previously used for manufacturing the plugs.

If the plugs are purchased and the facility rented, Regis Company wishes to realize $100,000 in net savings annually. To achieve this goal, the minimum annual rent on the facility must be:

• A) $10,000.
• B) $40,000.
• C) $70,000.
• D) $190,000.
• E) $280,000.

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Definitions:

Provisions

Supplies of food, drink, equipment, and other necessities, especially for a journey, military campaign, or period of scarcity.

American Policy

Refers to the set of laws, regulations, and guidelines adopted by the government of the United States to govern domestic and foreign affairs.

Philippines

A Southeast Asian country in the Western Pacific, comprising more than 7,000 islands, known for its waterfront promenade, colonial architecture, and diverse culture and history.

1898

Marked significant events such as the Spanish-American War, leading to the U.S. acquiring territories like Puerto Rico, Guam, and the Philippines.