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:

Literal Value

A fixed value explicitly presented in source code, such as numerical constants, character constants, or string literals.

Identifier

A name used in programming to identify variables, functions, classes, modules, and other elements.

Unary Arithmetic Expression

An expression in computer programming that involves an operator and only one operand; examples include increment (++), decrement (--) operations.

LiteralValue

A value explicitly written in the code, representing a fixed value such as a number, string, or boolean.