Alpha Co Can Produce a Unit of Beta for the Following

question 71

Multiple Choice

Alpha Co. can produce a unit of Beta for the following costs: An outside supplier offers to provide Alpha with all the Beta units it needs at $60 per unit. If Alpha buys from the supplier, Alpha will still incur 40% of its overhead. Alpha should:

• A) Buy Beta since the relevant cost to make it is $72.
• B) Make Beta since the relevant cost to make it is $56.
• C) Buy Beta since the relevant cost to make it is $48.
• D) Make Beta since the relevant cost to make it is $48.
• E) Buy Beta since the relevant cost to make it is $56.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, which measures the value of goods and services produced by a country in a year in real terms.

Standard of Living

The measure of affluence, luxury, tangible assets, and vital provisions offered to a chosen demographic or geographical zone.

1965 Ford Mustang

A model of car produced by Ford, marking the first year of production for the Mustang, one of the most iconic American sports cars.

Inflation Rate

A measure of how quickly the average cost of goods and services escalates, reducing the value of money to buy these over time.