Laskowski Company Manufactures a Part for Its Production Cycle The Fixed Factory Overhead Costs Are Unavoidable

question 82

Multiple Choice

Laskowski Company manufactures a part for its production cycle.The annual costs per unit for 5,000 units of the part are as follows:
$\begin{array}{ll}&\text { Per Unit }\\\text { Direct materials } & \$ 3.00 \\\text { Direct labor } & 5.00 \\\text { Variable factory overhead } & 4.00 \\\text { Fixed factory overhead } & \underline{2.00} \\\text { Total costs } & \$ 14.00\end{array}$
The fixed factory overhead costs are unavoidable.Hendricks Company has offered to sell 5,000 units of the same part to Laskowski Company for $14 per unit.The facilities currently used for the part could be used to make 5,000 units annually of a new product that would contribute $5 a unit to fixed expenses.No additional fixed costs would be incurred with the new product.Laskowski Company should ________.

• A) make the part to save $5,000
• B) make the part to save $15,000
• C) make the new product and buy the part to save $5,000
• D) make the new product and buy the part to save $15,000

---

Definitions:

Construct Systems

Theoretical frameworks used to understand and predict how people perceive, interpret, and interact with the world around them.

Kelly's Personal Construct Theory

A psychological theory proposing that individuals interpret the world and construct their own realities using personal constructs.

Freedom of Choice

The power or right to make one's own decisions without constraint, typically within legal parameters.

Kelly's Theory

A psychological framework proposing that individuals interpret the world through personal constructs, which then influence behavior and emotions.