Tish Corporation Produces a Part Used in the Manufacture of One

question 46

Multiple Choice

Tish Corporation produces a part used in the manufacture of one of its products.The unit product cost is $26,computed as follows:
An outside supplier has offered to provide the annual requirement of 5,000 of the parts for only $21 each.The company estimates that 75% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier.Assume that direct labor is an avoidable cost in this decision.Based on these data,the per-unit dollar advantage or disadvantage of purchasing from the outside supplier would be:

• A)$1 disadvantage
• B)$5 advantage
• C)$3 advantage
• D)$4 disadvantage

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Definitions:

Poorest 20%

Refers to the lowest quintile in an income distribution, representing the 20% of the population with the lowest income.

Faith Ringgold

Faith Ringgold is an American artist known for her narrative quilts that address issues of race, gender, and politics in the United States, blending visual art with story-telling.

Artistic Medium

The material or method used by an artist to create artwork, such as oil paint, sculpture, digital media, and more, each offering different possibilities and limitations for expression.

Gender

A range of characteristics of feminity, masculinity, and variations, often distinguished between biological sex and gender identity.