Frank CoIs Currently Operating at 80% of Capacity and Is Currently

question 24

Multiple Choice

Frank Co.is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit.The unit cost for Frank Co.to make the part is $30,which includes $3 of fixed costs.If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity,what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

• A)$60,000 cost decrease
• B)$40,000 cost decrease
• C)$40,000 cost increase
• D)$60,000 cost increase

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Suit

A legal action brought by one party against another in a court of law.

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Legal concept that determines whether an employee's actions are within the range of tasks assigned by their employer and relevant to their job duties.

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The behavior and actions of an individual working for a company, governed by workplace policies and laws.

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