The Following Standard Costs Pertain to a Component Part Manufactured

question 95

Multiple Choice

The following standard costs pertain to a component part manufactured by Ashby Company:
$\begin{array}{l}\begin{array}{lll}\text { Direct Materials}\\\text { Direct Labour}\\\text {Manufacturing Overhead}\\\text { Standard Cost per Unit}\\\end{array}\begin{array}{lll}\$ 2 \\\$ 5 \\\$ 20 \\\$ 27\end{array}\end{array}$
The company can purchase the part from an outside supplier for $25 per unit.The manufacturing overhead is 60% fixed,and this fixed portion would not be affected by this decision.Assume that direct labour is an avoidable cost in this decision.What would be the relevant amount of the standard cost per unit in a decision of whether to make the part internally or buy it from the external supplier?

• A) $2.
• B) $15.
• C) $19.
• D) $27.

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Definitions:

Dispositional

pertaining to stable characteristics or traits of an individual that influence their behaviors and attitudes.

Kelley's Attribution Theory

A framework suggesting that people interpret their own and others' behaviors by attributing them to either internal dispositions or external situations.

Best Fit Explanation

A theory or hypothesis that most accurately accounts for the evidence or data among competing options.

Own Behavior

An individual's actions or conduct as perceived or governed by their own conscious intentions or habits.