Talboe Company Makes Wheels That It Uses in the Production

question 16

Multiple Choice

Talboe Company makes wheels that it uses in the production of children's wagons. Talboe's costs to produce 200,000 wheels annually are as follows: $\begin{array}{lrr} \text {Direct materials } &£40,000\\ \text {Direct labour. } &60,00\\ \text {Variable manufacturing overhead } &30,000\\ \text {Fixed manufacturing overhead } &\underline{70,000}\\ \text {Total } &\underline{£200,000}\\\end{array}$

An outside supplier has offered to sell Talboe similar wheels for £0.80 per wheel. If the wheels are purchased from the outside supplier, £25,000 of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to anther company for £55,000 per year.
- What is the highest price that Talboe could pay the outside supplier for each wheel and still be economically indifferent between making or buying the wheels?

• A)£0.95
• B)£1.15
• C)£1.00
• D)£1.05

---

Definitions:

Employment Discrimination

Unjust or prejudicial treatment of individuals in a workplace environment based on race, age, gender, disability, or other protected characteristics.

Personal Prejudices

Individual biases or preconceived opinions that influence one's feelings or actions towards others or certain situations.

Perfect Candidate

An ideal individual for a specific role or position, meeting all desired qualifications and attributes.

Specialist

An individual with a high degree of expertise in a particular field or subject, often leading to increased efficiency in their work.