Peter CoMakes and Uses 5,000 Components Each Year in Its Manufacturing

question 70

Multiple Choice

Peter Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Peter at $66 per unit.Peter's production costs are as follows: If Peter accepts the order,$8 of fixed overhead per unit will be eliminated.
What is the per unit relevant cost of producing the product in this decision?

• A)$86
• B)$52
• C)$78
• D)$60

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Definitions:

Maturity

The period of time or deadline after which an obligation, such as a bond or loan, must be repaid in full.

Call Provisions

Conditions under which a bond issuer can retire the bond before it matures.

Interest Rates

It denotes the cost, specified as a percentage of the principal, imposed on borrowers by lenders for the privilege of using their assets.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.