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question 45

Multiple Choice

[The following information applies to the questions displayed below.]
Burns Industries currently manufactures and sells 20,000 power saws per month,although it has the capacity to produce 35,000 units per month.At the 20,000-unit-per-month level of production,the per-unit cost is $65,consisting of $40 in variable costs and $25 in fixed costs.Burns sells its saws to retail stores for $80 each.Allen Distributors has offered to purchase 5,000 saws per month at a reduced price.Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs.
-Which of the following is not a relevant factor in Burns' decision concerning whether to accept the special order from Allen?

• A)The opportunity cost involved in accepting Allen's order.
• B)The incremental cost of manufacturing an additional 5,000 saws per month.
• C)The $65 average cost per unit to manufacture a power saw.
• D)Where and at what price Allen intends to sell the saws.

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Definitions:

Material Success

The accumulation of wealth and physical possessions that are often used as a measure of a person's or organization's achievement.

Strain Theory

Holds that people may turn to deviance when they experience strain. Strain results when a culture teaches people the value of material success and society fails to provide enough legitimate opportunities for everyone to succeed.

American Culture

The set of customs, traditions, and values of the United States, influenced by its history of immigration and diversity.

State Prisons

Correctional facilities run by state governments for individuals convicted of serious crimes.