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:

Corpus Luteum

A temporary endocrine structure in female ovaries involved in the production of progesterone during the menstrual cycle and early pregnancy.

Follicle

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