Speck Company Manufactures a Part for Its Production Cycle

question 45

Multiple Choice

Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
The fixed factory overhead costs are unavoidable.
-Assume that Speck can buy 10,000 units of the part from another producer for $28 each. The current facilities could be used to make 10,000 units of a product that has a contribution margin of $10 per unit. No additional fixed costs would be incurred. Speck should

• A) make the new product and buy the part to earn an extra $6 per unit contribution to profit.
• B) make the new product and buy the part to earn an extra $2 per unit contribution to profit.
• C) continue to make the part to earn an extra $2 per unit contribution to profit.
• D) continue to make the part to earn an extra $6 per unit contribution to profit.

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Definitions:

Preload

Preload refers to the degree of stretch of the cardiac ventricles at the end of diastole, just before contraction.

Contractility

The capability of muscle tissue to contract or shorten, enabling movement and force generation.

Coronary Blood Flow

The circulation of blood in the blood vessels of the heart muscle (myocardium).

Coronary Arteries

The arteries that supply blood to the heart muscle, essential for maintaining the heart's oxygen and nutrient levels.