Speck Company Manufactures a Part for Its Production Cycle

question 108

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 $30 each. The facilities currently used to make the part could be rented out to another manufacturer for $40,000 a year. Speck should

• A) make the part as that would save $2 per unit.
• B) buy the part as that would save $6 per unit.
• C) buy the part as that would save $2 per unit.
• D) make the part as that would save $6 per unit.

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Definitions:

Basic Functions

Fundamental operations or activities crucial for the successful operation or formation of an entity or concept.

Production Concept

The philosophy of a business that concentrates more on the product that the business makes than on customer needs.

Time Series Analysis

A forecasting method that uses historical sales data to identify patterns over a period of time.

Historical Sales Data

Records of past sales performance, used to identify trends, forecast future sales, and make informed business decisions.