A Firm Currently Makes a Component,and Requires 30 000 for the Coming

question 18

Multiple Choice

A firm currently makes a component,and requires 30 000 for the coming year's production.Another supplier has offered the part at a delivered price of $3 per unit.It would cost $3000 to check purchased units for quality.Product costs per unit for the past year were $2.35 variable,and $1 fixed based on 30 000 units.If the component was bought,fixed overhead would be reduced by $6000,the cost of leasing specialised equipment.The space vacated by the equipment can be rented for $4000 for the year.Which of the following statements is the correct quantitative analysis of the make or buy decision?

• A) The buy option costs $12 500 more than the make option.
• B) The buy option costs $12 500 less than the make option.
• C) The buy option costs $10 500 more than the make option.
• D) The firm is indifferent between the two options.

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Definitions:

Motivation

Motivation is the process that initiates, guides, and maintains goal-oriented behaviors, driving individuals to pursue certain actions.

Resilience

The capacity to recover quickly from difficulties; toughness or adaptability in facing challenges.

Attitude

A settled way of thinking or feeling about someone or something, typically reflected in a person’s behavior.

Empathetic

The ability to understand and share the feelings of another person from their perspective.