Bovee Company Manufactures a Part for Its Production Cycle

question 93

Multiple Choice

Bovee 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.
-Clarke Company has offered to sell 10,000 units of the same part to Bovee for $104 a unit. Assuming no other use for the facilities, Bovee should

• A) make the part as this would save $8 per unit.
• B) buy from Clarke as this would save $20 per unit.
• C) make the part as this would save $20 per unit
• D) buy from Clarke as this would save $8 per unit.

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Definitions:

Gathering Data

The process of collecting information or facts from various sources to be used for analysis or decision-making.

Big Picture

An overall perspective or an understanding of how all the parts of a situation, project, or problem fit together.

External Locus

A belief system where an individual attributes their success or failure to external factors or forces beyond their control.

Internal Locus

Having the belief that one's own actions or behaviors are primarily responsible for their outcomes.