Supler Corporation Produces a Part Used in the Manufacture of One

question 44

Multiple Choice

Supler Corporation produces a part used in the manufacture of one of its products.The unit product cost is $18,computed as follows:
An outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each.The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier.Assume that direct labor is an avoidable cost in this decision.Based on these data,the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:

• A) ($1) per unit on average
• B) $1 per unit on average
• C) $2 per unit on average
• D) ($4) per unit on average

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Definitions:

Specialized Roles

Positions or jobs within an organization that require a specific set of skills or expertise, contributing to more efficient and effective performance.

Social Loafing

The phenomenon where individuals exert less effort when working in a group than when working alone.

Individual Performance

The measurement of work output or results achieved by a single person, often evaluated against predetermined standards or objectives.

Free Rider Effect

Occurs when individuals benefit from resources, goods, or services without contributing to the cost or effort.