Crispy Company Manufactures a Part for Its Production Cycle

question 11

Multiple Choice

Crispy Company manufactures a part for its production cycle.The annual costs per unit for 5,000 units of the part are as follows: The fixed factory overhead costs are unavoidable.Another company has offered to sell 5,000 units of the same part to Crispy Company for $15 per unit.The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year.Crispy Company should ________.

• A)make the part to save $1 per unit
• B)make the part to save $3 per unit
• C)buy the part to save $1 per unit
• D)buy the part to save $3 per unit

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Definitions:

Compressed Workweek

A schedule that allows employees to work their required hours over fewer days, such as four 10-hour days.

Self-Directed Work Team

A group of employees with varying skills and functions who collaborate without hierarchical supervision to achieve shared goals and improve operations.

Rent Controls

Government-imposed limits on the amount landlords can charge for leasing properties, aimed at making housing more affordable.

Inefficiently Low Quality

A form of inefficiency in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price; often a result of a price ceiling.