Answer the Following Questions Using the Information Below

question 94

Multiple Choice

Answer the following questions using the information below:
Melodee's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:

-The maximum price that Melodee's Preserves should be willing to pay for the decorative jars is:

• A)$0.28 per jar
• B)$0.38 per jar
• C)$0.72 per jar
• D)$1.00 per jar

---

Definitions:

Specific Identification

A method of inventory costing that identifies and assigns the actual cost to each individual item of inventory.

High-cost Items

Products or services that have a significant purchase price or maintenance cost.

Periodic Inventory System

An inventory system where inventory levels and the cost of goods sold are updated in the accounting records periodically, often at the end of an accounting period.

Gross Profit Method

An accounting technique used to estimate the amount of inventory a company has by using the gross margin percentage.