Answer the Following Question(s)using the Information Below

question 106

Multiple Choice

Answer the following question(s) using the information below.Konrade's Engine Company manufactures part TE456 used in several of its engine models.Monthly production costs for 1,000 units are as follows:
It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier.Konrade's Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.
-The maximum price that Konrade's Engine Company should be willing to pay the outside supplier is

• A)$80 per TE456 part.
• B)$82 per TE456 part.
• C)$98 per TE456 part.
• D)$100 per TE456 part.
• E)$50 per TE456 part.

---

Definitions:

Central Processing Units

The primary component of a computer that performs most of the processing inside a computer to execute instructions from both hardware and software.

Systems Competition

A form of competition that occurs not just between individual products or services, but between entire systems or platforms.

Network Externalities

The effect that one user of a product or service has on the value of that product to other people, often positive, where the value increases as more people use it.

Profit-maximizing

The process or strategy of adjusting production and sale levels to achieve the highest possible profit.