Supler Corporation Produces a Part Used in the Manufacture of One

question 9

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:

Hypertonic

A term referring to a solution having an osmotic pressure (or solute concentration) greater than that of the solution with which it is compared. Compare with hypotonic and isotonic.

Osmotic Pressure

The pressure that must be exerted on the hypertonic side of a selectively permeable membrane to prevent diffusion of water (by osmosis) from the side containing pure water.

Turgor Pressure

The force within the cell that pushes the plasma membrane against the cell wall.

Simple Diffusion

The movement of particles from a region of higher concentration to a region of lower concentration without the need for energy input.