L Ltd Can Subcontract Out One of Its Components at $18

question 58

Multiple Choice

L Ltd can subcontract out one of its components at $18 each. The business can produce the component internally for a total cost of $19 including the allocation of fixed costs at $5 per component. L Ltd has spare capacity. Should it make the component internally or contract it out?

• A)Make the component as the variable cost of $14 ($19-$5)for internal production is cheaper than the $18 cost of subcontracting.
• B)Subcontract as the total cost of subcontracting at $18 is cheaper than the cost of $19 for internal production.
• C)Subcontract as it will be easier.
• D)None of the above.

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Definitions:

Serial Processing

A cognitive process where the brain analyses information in a linear, step-by-step manner, allowing for detailed and accurate analysis of each item in sequence.

Symbol Manipulators

Symbol manipulators, in the context of cognitive science or artificial intelligence, refer to systems or devices that can alter, combine, or use symbols (representations of ideas or objects) to solve problems or perform tasks.

Parallel Processes

Parallel processes refer to the ability of the brain to process multiple information streams simultaneously, enhancing cognitive efficiency.

Serial

Pertaining to processes or operations that occur sequentially, one after the other, often used in context with information processing or serial tasks in cognitive psychology.