Figure 13-2

question 64

Multiple Choice

Figure 13-2. ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:
ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.
-Refer to Figure 13-2. Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally. Should ColorPro make or buy the part?

• A) Make the part because it will save $100,000 over buying it.
• B) Buy the part because it will save $100,000 over making it.
• C) Make the part because it will save $107,000 over buying it.
• D) Buy the part because it will save $107,000 over making it.
• E) Make the part because it will save $10,000 over buying it.

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Definitions:

Cognitive Dissonance

A psychological phenomenon where a person experiences discomfort or distress due to holding conflicting beliefs or attitudes, particularly after making a decision.

Buyer's Expectations

The anticipations or standards that a purchaser has regarding a product or service before making a purchase.

FAB (Features, Advantages, Benefits)

A marketing strategy that outlines a product's features, its advantages over competitors, and the benefits it offers to the customer.

AIDA Sequence

The AIDA sequence is a marketing model that outlines the four stages of the customer journey: Attention, Interest, Desire, and Action, used to guide advertising and sales strategies.