Zouar Computer Corporation Currently Manufactures the Disk Drives That It

question 83

Multiple Choice

Zouar Computer Corporation currently manufactures the disk drives that it uses in its computers.The costs to produce 5,000 of these disk drives last year were as follows: Kidal Electronics has offered to provide Zouar with all of its disk drive needs for $27 per drive.If Zouar accepts this offer, Zouar will be able to use the freed up space to generate an additional $40,000 of income each year to produce more of its computer keyboards.Only $3 per drive of the fixed manufacturing overhead cost above could be avoided.Direct labor is an avoidable cost in this decision.Based on this information, would Zouar be financially better off making the drives or buying the drives and by how much?

• A)$15,000 better to buy
• B)$20,000 better to buy
• C)$35,000 better to buy
• D)$60,000 better to make

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Definitions:

Move Eyes

The action of changing the direction of gaze by shifting the position of the eyeballs within the ocular orbit.

Induced Motion

The perception of movement in a stationary object due to the movement of the surrounding frame of reference.

Stationary Train

A train that is not moving or is designed to remain in one place.

Moving Forward

Progressing in a positive direction, often implying advancement towards a goal, improvement, or development.