Barker Company Produces a Part That Is Used in the Manufacture

question 75

Multiple Choice

Barker Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:
Of the fixed factory overhead costs, $60,000 is avoidable.
-Blass Company has offered to sell 5,000 units of the same part to Barker for $72 per unit. Assuming there is no other use for the facilities, Barker should

• A) make the part as this would save $12 per unit.
• B) buy the part as this would save $12 per unit.
• C) buy the part as this would save the company $60,000.
• D) make the part as this would save $4 per unit.

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Definitions:

Administrative

Pertains to the activities related to the management and execution of the policies and operations of an organization, ensuring smooth and efficient processes.

Technological

Relating to or involving technology, especially in regard to its development, usage, and impact on society.

Marketing Mix

A framework consisting of the four Ps (product, price, place, and promotion) that marketers adjust to meet the needs of their target market.

Price

The sum of money anticipated, demanded, or provided as compensation for something.