Cruise Company Produces a Part That Is Used in the Manufacture

question 254

Multiple Choice

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6500 units, are as follows: Assuming Cruise Company can purchase 6500 units of the part from Suri Company for $14.00 each, and the facilities currently used to make the part could be rented out to another manufacturer for $25,000 a year, what should Cruise Company do?

• A)Make the part and save $6.00 per unit.
• B)Make the part and save $12.50 per unit.
• C)Buy the part and save $1.00 per unit.
• D)Buy the part and save $1.35 per unit.

Recognize the effect of business transactions on the accounting equation.

Identify the principles and assumptions underlying the preparation of financial statements.

Understand the concepts of revenue, expenses, and equity in accounting.

Understand the basic concepts of assets, liabilities, and stockholders' equity and their roles in the accounting equation.

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