Krenski Corporation Has a Parts Division That Does Work for Other

question 14

Multiple Choice

Krenski Corporation has a Parts Division that does work for other Divisions in the company as well as for outside customers. The company's Equipment Division has asked the Parts Division to provide it with 10,000 special parts each year. The special parts would require £12.00 per unit in variable production costs.
The Equipment Division has a bid from an outside supplier for the special parts at £31.00 per unit. In order to have time and space to produce the special part, the Parts Division would have to cut back production of another part-the TW3 that it presently is producing. The TW3 sells for £35.00 per unit, and requires £13.00 per unit in variable production costs. Packaging and shipping costs of the TW3 are £3.00 per unit. Packaging and shipping costs for the new special part would be only £2.00 per unit. The Parts Division is now producing and selling 50,000 units of the TW3 each year. Production and sales of the TW3 would drop by 10% if the new special part is produced for the Equipment Division.
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The variable cost for the Parts Division is

• A)£12
• B)£2
• C)£10
• D)£14

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Definitions:

Collapse Structures

Geological features that form when the ground above a cavity or void in the Earth's crust falls in or collapses, often leading to sinkholes or cenotes.

Landslides

The movement of a mass of rock, earth, or debris down a slope due to gravity.

P-S Intervals

The time difference between the arrival of primary (P) and secondary (S) waves on a seismogram, used to determine the distance to an earthquake source.

Seismic Stations

Facilities equipped to detect, record, and measure seismic waves and activity, contributing to the monitoring and understanding of earthquakes.