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question 49

Multiple Choice

[The following information applies to the questions displayed below.]
Perry's Cycle Company manufactures annually 20,000 units of TushSeat,a bicycle seat used on many of the company's products,and also sold directly to retailers for $38 per unit.At the current level of production,the cost per unit to produce TushSeat consists of:
It has come to the attention of management that a seat of similar quality can be purchased from outside suppliers.
-Assume that Perry's fixed costs remain unchanged if the seats are purchased from an outside supplier.In order to operate more profitably by buying the seats rather than manufacturing them,Perry must negotiate a price per unit from the outside supplier that is less than:

• A)$27.
• B)$25.
• C)$22.
• D)$23.

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Definitions:

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Public Company Accounting Oversight Board

An independent oversight body established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.

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Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, including those related to financial statements and corporate governance.