A Firm Currently Makes a Component, and Requires 30 000

question 58

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. At what level of units of production is the firm indifferent between making and buying?

• A) 30 000 units
• B) 10 769 units
• C) 4615 units
• D) 20 000 units

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Definitions:

Generalizability

concerns the extent to which the findings from a study or research can be applied or extended to other contexts or populations.

White Supremacists

Individuals or groups who believe in the superiority of white people over those of other races, often advocating for segregation, racism, and intolerance.

Rural Midwestern

Pertaining to or characteristic of the countryside rather than the town within the Midwest region of the United States.

Reliability

In research and testing, it refers to the degree to which an assessment tool produces stable and consistent results over time.