Collins Company Uses 12,000 Units of a Part in Its

question 27

Multiple Choice

Collins Company uses 12,000 units of a part in its production process.The costs to make a part are: direct material,$15;direct labor,$27;variable overhead,$15;and applied fixed overhead,$32.Eichholtz has received a quote of $60 from a potential supplier for this part.If Collins buys the part,75 percent of the applied fixed overhead would continue.Collins Company would be better off by

• A)$30,000 to manufacture the part.
• B)$348,000 to buy the part.
• C)$60,000 to buy the part.
• D)$216,000 to manufacture the part.

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Definitions:

Psychological Causes

Factors originating in the mind that can contribute to or exacerbate a range of behaviors, feelings, or mental states.

Somatic Symptom Disorder

A mental disorder in which a person experiences physical symptoms that cause significant distress and impairment, which cannot be fully explained by a general medical condition.

Close Female Relatives

Immediate female family members, typically referring to mothers, sisters, and daughters, who share a close genetic or emotional bond.

Somatization Pattern

A somatization pattern refers to the manifestation of psychological distress through physical symptoms with no identifiable medical cause.