Sparrow Co

question 42

Multiple Choice

Sparrow Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $8.00 a unit. The unit cost for Sparrow Co. to make the part is $9.00, which includes $.60 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

• A) $12,000 cost decrease
• B) $4,000 cost increase
• C) $20,000 cost decrease
• D) $1,600 cost increase

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Definitions:

Ecological Process

Natural processes and interactions among organisms and their environment, influencing the distribution and abundance of living things.

Expulsion

The act of being officially removed or banned from an institution or organization.

Inclusive

Characterized by practices that ensure equal access, opportunities, and participation for all, regardless of differences or disabilities.

Substantial Quantity

A considerably large amount or volume of something.