Use the Following Information to Answer the Questions Below

question 21

Multiple Choice

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit. The annual fixed cost for this equipment is $50,000. 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 (see table) .

-Refer to the instruction above. What does the company save for the year by selecting the low-cost option (for annual requirements of 40,000 units) ?

• A) $150,000
• B) $300,000
• C) $50,000
• D) $40,000

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Definitions:

Unreasonably Dangerous

Describes a product or action that poses a risk of harm to people or property that exceeds what would be anticipated by the ordinary consumer.

Warranty Disclaimers

Legal statements that negate or limit the seller's liability for certain defects or failures in the goods or services provided.

Written

Expressed or conveyed by means of letters or symbols on a surface, typically intended to ensure permanence and clarity of the communication.

Liability

A legal obligation or responsibility that may arise from contracts, torts, or statutes requiring one party to compensate another.