Figure 7-3

question 97

Multiple Choice

Figure 7-3.Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.
-Refer to Figure 7-3. Calculate the activity rate for warranty work based on warranty hours. Round to the nearest whole dollar.

• A) $268 per hour
• B) $266 per hour
• C) $264 per hour
• D) $262 per hour
• E) $287 per hour

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Definitions:

Comparative Advantage

The ability of an individual, company, or country to produce a particular good or service at a lower opportunity cost than its competitors.

Import

The act of bringing goods or services into a country from abroad for the purpose of trade.

Export

The sale of goods or services from one country to another.

Trucks

Large heavy-duty vehicles designed for transporting goods and materials over long distances.