Use the Following Scenario to Answer the Questions Below

question 17

Multiple Choice

Use the following scenario to answer the questions below.
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit.You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year.The following table summarizes the details of this make versus buy decision.

-Refer to the instruction above.For what range of output would you prefer to make?

• A)40,000 or more units per year
• B)0 - 40,000 units per year
• C)30,000 or more units per year
• D)0 - 30,000 units per year

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Definitions:

Issuance

Issuance refers to the process of making securities available for sale by a corporation or government entity, typically in the context of raising capital.

Interest Payment

A payment made to lenders by borrowers, representing the interest accrued on the loan or debt for a specific period.

Carrying Value

The book value of an asset on a company’s balance sheet, calculated as the original cost minus accumulated depreciation.