A Company Manufactures Chips Used in the Production of Computers

question 95

Multiple Choice

A company manufactures chips used in the production of computers. The chips can be purchased for $50 each from an outside vendor. It costs the manufacturer $60 a chip to produce them, of which 25% is fixed overhead cost. What are the relevant costs for this decision? Based on these costs, which option should the company choose? Relevant Costs
(Manufacture and Purchase) Decision

• A)$50 and $45 Manufacture
• B)$50 and $45 Purchase
• C)$45 and $40 Purchase
• D)$45 and $40 Manufacture

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Definitions:

Strategic Business Insights

Analytical information and perspectives that provide depth understanding of business environments to aid strategic planning and decision-making.

Psychographic Segmentation

A method of segmenting customers based on how they spend their time and money, what activities they pursue, and their attitudes and opinions about the world in which they live.

NASCAR

The National Association for Stock Car Auto Racing, a company that organizes and oversees numerous auto racing events.

Marketing Efforts

Initiatives and activities undertaken by a company to promote its products or services.