Eichholtz Company Uses 10,000 Units of a Part in Its

question 62

Multiple Choice

Eichholtz Company uses 10,000 units of a part in its production process.The costs to make a part are: direct material,$12;direct labor,$25;variable overhead,$13;and applied fixed overhead,$30.Eichholtz has received a quote of $55 from a potential supplier for this part.If Eichholtz buys the part,70 percent of the applied fixed overhead would continue.Eichholtz Company would be better off by

• A)$50,000 to manufacture the part.
• B)$150,000 to buy the part.
• C)$40,000 to buy the part.
• D)$160,000 to manufacture the part.

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Definitions:

Obesity

A medical condition characterized by excessive body fat accumulated to the extent that it may have a negative effect on health.

Overweight

Having more body fat than is optimally healthy, often defined by a Body Mass Index (BMI) over 25 but below 30.

Self-Esteem

An individual's subjective evaluation of their own worth or personal value.

Bulimia Nervosa

An eating disorder characterized by binge eating followed by purging to avoid weight gain.