The Manager at Frame Manufacturing Reported the Cost to Product

question 34

Multiple Choice

The manager at Frame Manufacturing reported the cost to product Frame A was $22 per unit in 2011 and in 2012 the cost increased to $24 per unit.In 2013,the manager at a local supplier offered to supply Frame A for $20 per unit.For the make-or-buy decision:

• A)incremental revenues are $4 per unit.
• B)incremental costs are $2 per unit.
• C)net relevant costs are $2 per unit.
• D)differential costs are $4 per unit.
• E)None of these are correct.

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Definitions:

Chinese Law

The legal system that governs the People's Republic of China, characterized by a combination of statutory law and custom.

District of Columbia

The capital of the United States, Washington D.C., which is not part of any state.

Predominant-Purpose Test

The predominant-purpose test is a legal principle used to determine the character of a contract based on its primary objective, especially in mixed contracts involving elements of both goods and services.

Article 2

A section of the Uniform Commercial Code that governs the sale of goods in the United States.