Use the Information Below to Answer the Following Question(s)

question 233

Multiple Choice

Use the information below to answer the following question(s) :
Star Appliance manufactures a variety of appliances which all use Part 92F. Currently, Star Appliance manufactures Part 92F itself. It has been producing 8,000 units of Part 92F annually. The annual costs of producing Part 92F at the level of 8,000 units include:

All of the fixed manufacturing overhead costs would continue whether Part 92F is made internally or purchased from an outside supplier. Star Appliance has no alternative use for the manufacturing facilities.
-Roger Parts Company has offered to sell 8,000 units of Part 92F to Star Appliance for $22.00 per unit. What should Star Appliance do?

• A) Make the part and save $4 per unit.
• B) Make the part and save $1 per unit.
• C) Buy from Roger Parts Company and lose $1 per unit.
• D) Make the part and save $3 per unit.

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Definitions:

Decision Making

The method of selecting options through recognizing a choice to be made, collecting relevant information, and evaluating different solutions.

Determining Accomplishments

The process of identifying and recognizing achievements or completed objectives.

Best Course

A term that generally refers to the most effective or advantageous educational or instructional path for learning a specific subject or skill.

Bounded Rationality

A concept suggesting that in decision-making, individuals' rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions.