Kirsten Corporation Makes 100,000 Units Per Year of a Part

question 59

Essay

Kirsten Corporation makes 100,000 units per year of a part called a B345 gasket for use in one of its products.Data concerning the unit production costs of the B345 gasket follow:
An outside supplier has offered to sell Kirsten Corporation all of the B345 gaskets it requires.If Kirsten Corporation decided to discontinue making the B345 gaskets,25% of the above fixed manufacturing overhead costs could be avoided.Assume that direct labor is a variable cost.
Required:
a.Assume Kirsten Corporation has no alternative use for the facilities presently devoted to production of the B345 gaskets.If the outside supplier offers to sell the gaskets for $0.46 each,should Kirsten Corporation accept the offer? Fully support your answer with appropriate calculations.
b.Assume that Kirsten Corporation could use the facilities presently devoted to production of the B345 gaskets to expand production of another product that would yield an additional contribution margin of $10,000 annually.What is the maximum price Kirsten Corporation should be willing to pay the outside supplier for B345 gaskets?

Describe the effects of social influence on individual behavior.

Understand the role of common goals in reducing intergroup conflict.

Explain the factors that contribute to conformity and the impact of group pressure on decision making.

Understand the factors that increase or decrease obedience in individuals.

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Definitions:

Profession

A disciplined group of individuals who adhere to ethical standards and possess specialized knowledge and skills in a significant field of human endeavor.

Discrimination

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Emergency Room

A specialized department in a hospital that provides immediate treatment for acute illnesses and injuries.

Allopathic Medicine

A system of medical practice that aims to combat disease by using remedies such as drugs or surgery, which produce effects different from those caused by the disease under treatment.