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204) In deciding whether to outsource, managers must consider A) relevant

Question : 204) In deciding whether to outsource, managers must consider A) relevant : 1862439

204) In deciding whether to outsource, managers must consider

A) relevant fixed and variable components.

B) sunk costs.

C) only variable costs.

D) none of the above.

205) Outsourcing decisions are sometimes referred to as

A) make-or-buy decisions.

B) make decisions.

C) buy decisions.

D) none of the above.

206) All of the following are outsourcing considerations, except

A) Are any fixed costs avoidable if we outsource?

B) How do our fixed costs compare to the outsourcing cost?

C) What could we do with the freed capacity?

D) How do our variable costs compare to the outsourcing cost?

207) If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon

A) avoidable fixed costs.

B) opportunity costs.

C) unavoidable fixed costs.

D) none of the above.

208) Managers should consider which of the following when deciding whether to outsource a product or service?

A) Quality of the product or service

B) Delivery schedule of the product or service

C) Cost charged for the product or service

D) All of the above

209) Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes fixed costs of $60,000 and variable costs of $60,000. The company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs.

If Harvey Automobiles makes the part, how much will its operating income be?

A) $42,000 greater than if the company bought the part

B) $42,000 less than if the company bought the part

C) $78,000 greater than if the company bought the part

D) $78,000 less than if the company bought the part

210) Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes fixed costs of $60,000 and variable costs of $60,000. By outsourcing the part, the company can avoid 30% of the fixed costs.

If Harvey Automobiles buys the part, what is the most Harvey Automobiles can spend per unit so that operating income equals the operating income from making the part?

A) $1.30

B) $1.95

C) $4.05

D) $2.33

211) Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 40,000 parts is $120,000, which includes fixed costs of $60,000 and variable costs of $60,000. The company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs.

Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for $12,000 profit. If Harvey Automobiles makes the part, what will its operating income be?

A) $54,000 greater than if the company bought the part

B) $30,000 less than if the company bought the part

C) $30,000 greater than if the company bought the part

D) $150,000 greater than if the company bought the part

212) Cuyahoga Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.50 per unit, and avoid 30% of the fixed costs.

If Cuyahoga Valley Bicycles makes the part, how much will its operating income be?

A) $90,400 less than if the company bought the part

B) $45,600 less than if the company bought the part

C) $47,600 greater than if the company bought the part

D) $49,600 greater than if the company bought the part

213) Cuyahoga Valley Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $68,000 and variable costs of $70,000. By outsourcing the part, the company can avoid 30% of the fixed costs.

If Cuyahoga Valley Bicycles buys the part, what is the most Cuyahoga Valley Bicycles can spend per unit so that operating income equals the operating income from making the part?

A) $1.33

B) $2.26

C) $4.64

D


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