Answer the Following Questions Using the Information Below:
Nullabor Corporation

question 187

Multiple Choice

Answer the following questions using the information below:
Nullabor 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:
$$\begin{array} { l r } \text { Direct materials } & \$ 45000 \\\text { Direct labour } & 65000 \\\text { Variable factory overhead } & 30000 \\\text { Fixed factory overhead } & \underline { 70000 } \\\quad \text { Total costs } & \underline{\$ 210000 }\\\end{array}$$ Of the fixed factory overhead costs,$30 000 is avoidable.
-If a company has excess capacity,the most it would pay for buying a product that it currently makes would be the:

• A)market value less the usual mark-up on the product.
• B)market value of the product.
• C)total variable cost of producing the product.
• D)total cost of producing the product.

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Definitions:

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Higher-order Conditioning

A conditioned response is linked to a new stimulus by associating the new stimulus with a previously conditioned stimulus.

Conditioned Stimulus

A previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.