Epsilon Co An Outside Supplier Offers to Provide Epsilon with All the Costs

question 119

Multiple Choice

Epsilon Co.can produce a unit of product for the following costs: $$\begin{array}{l}\begin{array} { l l r } \text {Direct material }& \$8\\\text {Direct labor }&24\\\text {Overhead }&40\\\text {Total product costs per unit }&\$72\\\end{array}\end{array}$$ An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit.If Epsilon buys from the supplier,the company will still incur 40% of its overhead.Epsilon should choose to:

• A)Buy since the relevant cost to make it is $72.
• B)Make since the relevant cost to make it is $56.
• C)Buy since the relevant cost to make it is $48.
• D)Make since the relevant cost to make it is $48.
• E)Buy since the relevant cost to make it is $56.

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Definitions:

James-Lange Theory

A theory of emotion suggesting that emotions occur as a result of physiological reactions to events, implying that the body's response precedes the experience of emotion.

Cannon-Bard Theory

A theory of emotion that suggests that physical and emotional responses to stimuli occur simultaneously and independently.

Sympathetic Nervous System Arousal

Activation of the part of the autonomic nervous system that increases heart rate, releases adrenaline, and prepares the body for a 'fight or flight' response.

Sympathetic Nervous System

The sympathetic nervous system is part of the autonomic nervous system that prepares the body for fight or flight responses, increasing heart rate, redirecting blood flow, and releasing adrenaline, among other effects.