(Appendix 11A) Ebbs Products, Inc

question 88

Multiple Choice

(Appendix 11A) Ebbs Products, Inc., has a Motor Division that manufactures and sells a number of products, including a standard motor. Data concerning that motor appear below:
The Automotive Division of Ebbs Products, Inc needs 9,000 special heavy-duty motors per year. The Motor Division's variable cost to manufacture and ship this special motor would be $46 per unit. Because these special motors would requires more manufacturing resources than the standard motor, the Motor Division would have to reduce its production and sales of standard motors to outside customers from 86,000 units per year to 72,500 units per year.
-What is the total contribution margin on sales to outside customers that the Motor Division would give up if it were to make the special motors for the Automotive Division?

• A) $513,000
• B) $342,000
• C) $769,500
• D) $1,093,500

---

Definitions:

Path-Goal Leadership Model

A theory that outlines how leaders can motivate employees to achieve their goals by choosing the most effective leadership style based on the situation, employee characteristics, and the task.

Achievement-Oriented Leadership

A leadership style focused on setting challenging goals and encouraging high performance.

Directive Leadership

A leadership style characterized by providing clear, explicit instructions and expecting compliance from subordinates.

Participating

In a management context, a leadership style characterized by sharing decision-making responsibilities with team members, promoting a sense of ownership and involvement.