Deciding Whether to Make a Component Part or to Purchase

question 163

Multiple Choice

Deciding whether to make a component part or to purchase it, would be an example of which cost allocation purpose?

• A)to provide information for economic decisions
• B)to motivate managers
• C)to determine employee's wages
• D)to measure income and assets for reporting to external parties
• E)to motivate employees

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Definitions:

Sodium Palmitate

A sodium salt of palmitic acid, used in soap making and as a surfactant in cosmetics.

Tristearin

A triglyceride derived from stearic acid, commonly found in animal and vegetable fats, used in the production of soaps and cosmetics.

B-carotene

A highly pigmented orange compound that is a precursor to vitamin A, found in various fruits and vegetables and used as a dietary supplement.

Phosphatidic Acid

A phospholipid that acts as a key intermediate in the biosynthesis of many other lipids.