Sardi Incis Considering Whether to Continue to Make a Component or or to Buy

question 53

Multiple Choice

Sardi Inc.is considering whether to continue to make a component or to buy it from an outside supplier.The company uses 17,000 of the components each year.The unit product cost of the component according to the company's cost accounting system is given as follows:
Assume that direct labor is a variable cost.Of the fixed manufacturing overhead,70% is avoidable if the component were bought from the outside supplier.In addition,making the component uses 2 minutes on the machine that is the company's current constraint.If the component were bought,time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $7.00 per unit.
When deciding whether to make or buy the component,what cost of making the component should be compared to the price of buying the component?

• A) $24.21 per unit
• B) $25.50 per unit
• C) $20.71 per unit
• D) $22.00 per unit

Recognize the significance of motivation, its sources, and how it influences human behavior.

Distinguish between intrinsic and extrinsic motivation and their roles in behavior.

Appreciate the importance of stress, its perception, and its influence on individuals.

Identify key psychological needs and drives, including those related to achievement, affiliation, and control.

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Definitions:

Doctrine

A belief or set of beliefs held and taught by a church, political party, or other group.

Specific Nerve Energies

The theory that different sensory nerves convey specific types of sensory information to the brain.

Sensory Neuron

A type of neuron that transmits signals from sensory receptors towards the central nervous system, allowing perception of sensory stimuli.

Sensation

The detection, by sense organs, of physical energy emitted or reflected by physical objects.