McGraw Inc

question 76

Multiple Choice

McGraw Inc.manufactures 12,000 units of a part used in its production to manufacture guitars.The annual production activities related to this part are as follows: Hill Inc.has offered to sell 12,000 units of the same part to McGraw for $22 per unit.If McGraw were to accept the offer,some of the facilities presently used to manufacture the part could be rented to a third party at an annual rental of $18,000.Moreover,$4 per unit of the fixed overhead applied to the part would be totally eliminated.
-In the decision to make or buy the part,what is the relevant fixed overhead for McGraw Inc.?

• A)$30,000
• B)$54,000
• C)$84,000
• D)$48,000

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Definitions:

Diversity Of Opinion

The presence of varying viewpoints and perspectives within a group or discussion.

Chief Executive Officer

The highest-ranking executive in a company or organization, responsible for making major corporate decisions, managing the overall operations and resources, and serving as the main point of communication between the board of directors and corporate operations.

Risky Shift

A tendency for groups to take greater risks than the same individuals (on average) would have decided to take individually.

Group Polarization

The tendency of a group to make decisions that are more extreme than the initial inclination of its members, following group discussions.