Car Parts Company manufactures a part for use in its production of automobiles.The costs per unit when 10,000 items are produced are:
Auto Company has offered to sell to Car Parts Company 10,000 units of the part for $60.The plant facilities could be used to manufacture another part at a savings of $90,000 if Car Parts accepts the offer.In addition, $10 per unit of fixed manufacturing overhead on the original part would be eliminated.Required:
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Car Parts Company? By how much?
Definitions:
Reinforcement Theory
A behavioral theory positing that behavior is shaped and maintained by its consequences, such as rewards or punishments.
Classical Conditioning
A learning process that involves creating associations between a naturally occurring stimulus and a previously neutral one, leading to a learned response.
Operant Conditioning
The process of forming associations between learning and behavior by controlling its consequences.
External Attributions
The process of explaining an individual's behavior by ascribing it to causes outside the individual, such as environmental or situational factors.
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