WTGinsburg Engine Company Manufactures Part ACT30107 Used in Several of Its

question 89

Multiple Choice

W.T.Ginsburg Engine Company manufactures part ACT30107 used in several of its engine models.Monthly production costs for 1,090 units are as follows:
$\begin{array}{ll}\text { Direct materials } & \$ 46,000 \\\text { Direct labor } & 10,500 \\\text { Variable overhead costs } & 32,500 \\\text { Fixed overhead costs } & \underline{22,000} \\\quad \text { Total costs } & \$ 1111,000 \\\end{array}$
It is estimated that 6% of the fixed overhead costs assigned to ACT30107 will no longer be incurred if the company purchases ACT30107 from the outside supplier.W.T Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit.
If the company accepts the offer from the outside supplier,the monthly avoidable costs (costs that will no longer be incurred) total ________.

• A)$90,320
• B)$89,000
• C)$111,000
• D)$112,320

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Definitions:

Self-Serving Bias

The tendency to attribute positive outcomes to internal factors and negative ones to external factors, thereby protecting self-esteem.

Peripheral Route

A concept in persuasion that refers to the influence of cues that are not directly related to the message content, such as the attractiveness or credibility of the source.

Central Route

A pathway of persuasion that involves thoughtful consideration of the arguments presented, leading to lasting attitude change.

Cognitive Dissonance

A psychological phenomenon involving conflicting attitudes, beliefs, or behaviors that cause mental discomfort leading to an alteration in one of the attitudes, beliefs, or behaviors to reduce the discomfort.