ProPrinters Uses Part 87A in the Production of Colour Printers

question 71

Multiple Choice

ProPrinters uses part 87A in the production of colour printers. Unit manufacturing costs of part 87A are as follows:
ProPrinters uses 100,000 units of 87A per year. Printers R Us has offered to sell ProPrinters 100,000 units of 87A per year for $12. Fixed overhead is unavoidable. $\begin{array}{lr}\text { Direct materials } & \$ 8 \\\text { Direct labour } & 2 \\\text { Variable overhead } & 1 \\\text { Fixed overhead } & 4\end{array}$
-Refer to the Figure.Should ProPrinters make or buy the part,and what would be the financial consequence?

• A)make the part because it will save $100,000 over buying it
• B)buy the part because it will save $100,000 over making it
• C)make the part because it will save $1,100,000 over buying it
• D)buy the part because it will save $1,100,000 over making it

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Definitions:

Union Suppression

Efforts by employers or governments to hinder or prevent the formation and activities of labor unions.

Low Cost

Offering or acquiring goods, services, or resources at a minimal expense, often emphasizing efficiency and economic savings.

Differentiation

The process of distinguishing a product, service, or entity from others to make it more attractive to a particular target market or demographic.

Rawlsian Justice

A theory of justice that emphasizes fairness and equality, positing that a just society will protect the least advantaged members.