Frederick Co If Frederick Can Buy 5,000 Units from an Outside Supplier

question 63

Multiple Choice

Frederick Co.is thinking about having one of its products manufactured by an outside supplier. Currently,the cost of manufacturing 5,000 units is:
$$\begin{array}{l}\begin{array} { l l r } \text {Direct material }&\$62,000\\\text {Direct labor }&47,000\\\text {Variable Factory overhead }&38,000\\\text {Factory overhead }&52,000\end{array}\end{array}$$ If Frederick can buy 5,000 units from an outside supplier for $130,000,it should:

• A)Make the product because current factory overhead is less than $130,000.
• B)Make the product because the cost of direct material plus direct labor of manufacturing is less than $130,000.
• C)Make the product because factory overhead is a sunk cost.
• D)Buy the product because total fixed and variable manufacturing costs are greater than $130,000.
• E)Buy the product because the total incremental costs of manufacturing are greater than $130,000.

---

Definitions:

E-Mail Address

A unique identifier for an email account, enabling the sending and receiving of electronic messages over the internet.

Buyer's Beliefs

The individual perceptions and convictions that influence how a consumer feels about and interacts with a product or brand.

Its Value

Refers to the importance or worth of something, often considering its utility, benefits, or the satisfaction it provides.

Marketing Analytics

Marketing analytics is the practice of measuring, managing, and analyzing marketing performance to maximize its effectiveness and optimize return on investment (ROI).