Worrell Industries Is Currently Purchasing Part No

question 54

Essay

Worrell Industries is currently purchasing Part No. 456 from an outside supplier for $90 per unit. Because of supplier reliability problems, the company is considering producing the part internally in a currently idle manufacturing plant. Annual volume over the next five years is expected to total 400,000 units at variable manufacturing costs of $88 per unit.
Worrell must acquire $200,000 of new equipment if it reopens the plant. The equipment has a five-year service life and a $20,000 salvage value, and will be depreciated by the straight-line method. (Note: Worrell ignores salvage values in depreciation calculations.) Normal equipment maintenance is expected to total $12,000 in year 4, and the equipment will be sold at the end of its life.
Required:
Rounding to the nearest dollar, use the net-present-value method (total-cost approach) and a 12% after-tax hurdle rate to determine whether Worrell should make or buy Part No. 456. The company is subject to a 30% income tax rate.

Formulate null and alternative hypotheses for comparing means of two populations.

Determine the appropriate test statistic for hypothesis testing in different scenarios.

Calculate degrees of freedom for various t-tests.

Apply the concept of pooled variance in hypothesis testing.

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Definitions:

Hegemony

A concept in political and sociological theory referring to the dominance of one group over others, often exercised through cultural and ideological means rather than by sheer force.

Post-structuralism

An intellectual movement criticizing the assumptions and methodologies of structuralism, emphasizing the instability of meaning and the complexities of power relations.

Abnormalizing

The process of labeling or treating certain behaviors, individuals, or groups as deviant from societal norms.

Othering

The process of perceiving or portraying someone or a group as fundamentally different or alien, used to emphasize and justify discrimination or marginalization.