What Is the Monthly Operating Advantage (Disadvantage) of Purchasing the Goods

question 94

Multiple Choice

What is the monthly operating advantage (disadvantage) of purchasing the goods internally assuming the Production Division is able to utilize the facilities for other operations resulting in monthly cash-operating savings of $40,000?

• A) $400,000
• B) $40,000
• C) $(240,000)
• D) $(280,000)
• E) $(400,000)

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Definitions:

Fossil Fuels

Natural fuels formed from the remains of living organisms, such as coal, oil, and natural gas.

Gas Hydrate

An icelike solid mixture of water and a natural gas, usually methane.

Coal-bed Methane

A type of natural gas extracted from coal beds, often used for heating and generating electricity.

Oil Shale

A kerogen-bearing, thinly layered, fine-grained sedimentary rock that yields liquid or gaseous hydrocarbons upon heating and distillation.