A Business Is Operating at 90% of Capacity and Is

question 76

Multiple Choice

A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

• A) $150,000 cost increase
• B) $ 90,000 cost decrease
• C) $150,000 cost increase.
• D) $ 90,000 cost increase.

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Definitions:

Project Manager

A professional responsible for planning, executing, and closing projects, overseeing the work of a team, and ensuring projects meet their goals and deadlines.

Scrum Approach

A framework utilized in agile software development where teams work in short sprints to complete predetermined portions of work, allowing for quick adjustments based on feedback.

Agile Development

A software development methodology characterized by iterative progress, flexibility, and collaboration.

Scrum Sprints

Short, consistent periods used in Scrum methodology during which specific work has to be completed and made ready for review.