The Norran Company Needs 15,000 Units of a Certain Part

question 46

Multiple Choice

The Norran Company needs 15,000 units of a certain part to use in its production cycle. If Norran buys the part from Waterloo Company instead of making it, Norran could not use the released facilities in another activity; thus, all of the fixed overhead applied will continue regardless of what decision is made. Accounting records provide the following data: Cost to Norran to make the part:
Direct materials, $3
Direct labor, $12
Variable overhead, $13
Fixed overhead applied, $8
Cost to buy the part from the Waterloo Company, $27
In deciding whether to make or buy the part, Norran's total relevant costs to make the part are

• A) $360,000.
• B) $240,000.
• C) $420,000.
• D) $405,000.

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Definitions:

Macronutrient

A type of nutrient required in large amounts for proper growth, metabolism, and physiological function, including carbohydrates, proteins, and fats.

Membrane Permeability

A measure of the ability of a biological membrane to allow substances to pass through it, which can be affected by factors such as temperature and pH.

Macronutrient

Nutrients required by organisms in larger amounts for growth and energy, including proteins, carbohydrates, and fats.

Carbohydrates

Organic compounds consisting of carbon, hydrogen, and oxygen, in a ratio of 1:2:1 respectively, serving as a major energy source for organisms.