Houser Corporation Manufactures a Part for Its Production Cycle A)Make $20,000
B)Make $120,000
C)Buy $40,000
D)Buy $100,000

question 146

Multiple Choice

Houser Corporation manufactures a part for its production cycle.The costs per unit for 5,000 units of this part are as follows: Kingston Company has offered to sell Houser Corporation 5,000 units of the part for $112 per unit.If Houser Corporation accepts Kingston Company's offer,total fixed costs will be reduced to $60,000.Which alternative is more desirable,and by what amount is it more desirable?
Alternative Amount
$$\begin{array} { l r } \text { Direct materials } & \$ 32 \\\text { Direct labour } & 40 \\\text { Variable overhead } & 16 \\\text { Fixed overhead } & 32 \\\text { Total } & \$ 120\end{array}$$

• A)Make $20,000
• B)Make $120,000
• C)Buy $40,000
• D)Buy $100,000

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Definitions:

Structure

The arrangement of atoms within a molecule, determining the molecule's shape and chemical behavior.

P-aminobenzoic Acid

A white crystalline substance that is a part of the vitamin B complex and is used in sunscreen products.

Structure

The arrangement or organization of something's parts or elements which defines its nature or function.

Aromatic

Organic compounds that contain one or more benzene rings or similar structures, characterized by a high degree of chemical stability and unique reactions.