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:

Amygdala

An almond-shaped mass of nuclei located deep within the temporal lobes of the brain, involved in emotion regulation, memory processing, and decision-making.

Hypothalamus

A region of the brain below the thalamus, responsible for coordinating both the autonomic nervous system and the activity of the pituitary, regulating body temperature, thirst, hunger, and other homeostatic systems.

Hippocampus

A region of the brain involved in the formation of new memories and associated with learning and emotions.