Alex International Needs 20,000 Units of a Certain Part to Use

question 159

Multiple Choice

Alex International needs 20,000 units of a certain part to use in its production cycle.If Alex buys the part from Nicole Company instead of making it,Alex 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 Alex to make the part:
What should Alex's decision be,and what is the total cost savings that would result?

• A)Buy,$180,000
• B)Buy,$20,000
• C)Make,$180,000
• D)Make,$20,000

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Definitions:

Organizational Change

The process by which companies or organizations change their structure, strategies, operational methods, technologies, or organizational culture to affect change within the organization or to respond to external influences.

Cost-Cutting Strategy

A business approach aimed at reducing expenses to improve overall profitability without compromising the quality of products or services.

Planned Organizational Change

Deliberate efforts to modify an organization's processes, culture, or structure to improve effectiveness.

Communicate

The act of conveying information, ideas, or feelings from one entity to another through various methods, including speech, writing, or non-verbal expressions.