Meacham Company Has Traditionally Made a Subcomponent of Its Major

question 28

Multiple Choice

Meacham Company has traditionally made a subcomponent of its major product. Annual production of 20,000 subcomponents results in the following costs: Meacham has received an offer from an outside supplier who is willing to provide 20,000 units of this subcomponent each year at a price of $28 per subcomponent. Meacham knows that the facilities now being used to make the subcomponent would be rented to another company for $75,000 per year if the subcomponent were purchased from the outside supplier. Otherwise, the fixed overhead would be unaffected.
-Suppose the price for the subcomponent has not been set.At what price per unit charged by the outside supplier would Meacham be economically indifferent between making the subcomponent or buying it from the outside?

• A)$30.25
• B)$29.25
• C)$26.50
• D)$31.50

Recognize where cash investments by owners appear in financial statements.

Understand the risk and return characteristics of different investment types.

Analyze and calculate changes in equity and understand its implications.

Understand the basic concepts and terminology related to foreign exchange transactions and hedging strategies.

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Definitions:

United States

The United States is a federal republic in North America, comprised of 50 states, known for its significant influence on global politics, economy, and culture, and for its leadership in democratic values.

Berlin Uprising

A major revolt in East Berlin in 1953 by workers and citizens against the government of the German Democratic Republic (East Germany), brutally suppressed by Soviet forces.

East German Government

The government of the German Democratic Republic (East Germany), a socialist state that existed from 1949 to 1990, aligned with the Soviet bloc.

Consumer Goods

Products and services that are bought for personal or household use.