Epsilon Co An Outside Supplier Offers to Provide Epsilon with All the Following

question 91

Multiple Choice

Epsilon Co. can produce a unit of product for the following costs: $\begin{array}{llcc} \text { Direct material } &\$8\\ \text { Direct labor } &24\\ \text { Overhead } &\underline{40}\\ \text {Total costs per unit } &\$72\\\end{array}$
An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:

• A) Buy since the relevant cost to make it is $72.
• B) Make since the relevant cost to make it is $56.
• C) Buy since the relevant cost to make it is $48.
• D) Make since the relevant cost to make it is $48.
• E) Buy since the relevant cost to make it is $56.

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Definitions:

Watson's Little Albert

An experiment conducted by John B. Watson demonstrating classical conditioning by causing a young boy to develop a phobia of white rats.

UCS

An abbreviation commonly used in psychology that stands for Unconditioned Stimulus, which automatically triggers a response without any prior learning.

Stimulus Generalization

The tendency to respond to a stimulus that is only similar to the original conditioned stimulus with the conditioned response.

Stimulus Adaptation

The decrease in responsiveness of sensory receptors to a constant stimulus over time, leading to a diminished perception of the stimulus.