Glover Company Produces a Part That Has the Following Costs $\$ 9$

question 47

Multiple Choice

Glover Company produces a part that has the following costs per unit:
Direct material                                $\$ 9$
Directlabor                                        4
Variable overhead                              2
$\text { Fixed overhead. }$                         $\underline{6}$
Total                                                $\underline{\$21}$


London Corporation can provide the part to Glover for $23 per unit.Glover Company has determined that 50 percent of its fixed overhead would continue if it purchased the part.However,if Glover no longer produces the part,it can rent that portion of the plant facilities for $70,000 per year.Glover Company currently produces 12,000 parts per year.Which alternative is preferable and by what margin?

• A)Make-$24,000
• B)Make-$60,000
• C)Buy-$10,000
• D)Buy-$46,000

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Definitions:

Prenatal Diagnosis

The process of testing for diseases or conditions in a fetus or embryo before it is born.

Ultrasound

A medical imaging technique that uses high-frequency sound waves to create images of structures within the body, commonly used in pregnancy.

Cell-free Fetal DNA

Fragments of the fetus's DNA that circulate in the maternal blood, used in non-invasive prenatal testing to assess the risk of certain genetic disorders without risking miscarriage.

Noninvasive Prenatal Testing

A method of determining the risk of a fetus having certain genetic abnormalities using a blood sample from the mother.