Easton Company Makes and Sells Scooters Easton Can Currently Purchase the Scooters It Makes from Weston

question 43

Multiple Choice

Easton Company makes and sells scooters.Easton incurred the following costs in its most recent fiscal year: $\begin{array}{c}\text { Cost Items Appearing on the Income Statement }\\\begin{array}{|l|l|}\hline\text { Materials cost ( } \$ 10 \text { per unit) } & \text { Depreciation on manufacturing equipment } \\\hline \text { Company president's salary } & \text { Salaries of administrative personnel } \\\hline \text { Labor cost ( } \$ 4 \text { per unit) } & \text { Research and development costs } \\\hline \text { Advertising costs }(150,000 \text { per year) } & \text { Real estate taxes on factory } \\\hline \text { Shipping and handling (\$0.15 per unit) } & \text { Inspection costs } \\\hline\end{array}\end{array}$ Easton can currently purchase the scooters it makes from Weston Company.If the company purchases the scooters,Easton would still continue to use its own logo,sales staff,and advertising programs.If Easton outsources the scooters to Weston,which of the following costs would be relevant to the outsourcing decision?

• A) Materials cost
• B) Shipping and handling
• C) Inspection costs
• D) All of these answers are correct.

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Definitions:

Tricuspid Valve

Valve closing the orifice between the right atrium and the right ventricle of the heart.

Pulmonary Semilunar Valve

A valve in the heart located between the right ventricle and the pulmonary artery, preventing backflow of blood into the heart.

Aortic Semilunar Valve

A valve in the heart that lies between the left ventricle and the aorta, preventing backflow of blood into the ventricle.

Pulmonary Trunk

A major blood vessel that carries blood from the heart’s right ventricle to the lungs for oxygenation.