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:

Hasten Death

Actions or interventions designed to accelerate the end of life, often discussed in the context of terminal illness and euthanasia.

Hospital Setting

The healthcare environment found in hospitals where patients receive diagnosis, treatment, and care.

Postmortem Care

The care and handling of a body immediately following death, which may involve cleaning, dressing, and positioning the body for viewing or burial.

Religious Beliefs

Convictions or principles held regarding a faith or doctrine, which influence an individual's way of life and actions.