Answer the Following Question(s) Using the Information Below

question 119

Multiple Choice

Answer the following question(s) using the information below.
Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
Of the fixed factory overhead costs, $30,000 is avoidable.
-Lynn Valley Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Reliance Corp has contacted Lynn Valley with an offer to sell them 5,000 of the subassemblies for $44.00 each. Lynn Valley will eliminate $50,000 of fixed overhead if it accepts the proposal.
Should Omark make or buy the subassemblies? What is the difference between the two alternatives?

• A) buy; savings = $20,000
• B) buy; savings = $50,000
• C) make; savings = $60,000
• D) make; savings = $10,000
• E) buy; savings = $10,000

---

Definitions:

Illegal Action

Activities or behaviors that are prohibited by law and subject to legal penalties upon conviction.

Freedom of Information Act

A law that grants the public the right to request access to records from any federal agency, promoting transparency in government.

Federal Agencies

Organizations that operate within the federal government to carry out specific tasks and duties as defined by Congress.

Congressional Oversight Committees

Congressional oversight committees are panels within the U.S. Congress tasked with reviewing and supervising federal agencies, programs, and policy implementation.