Based on the given information the 'opportunity cost amounted to $168'.
What is Opportunity cost?
Opportunity cost is the potential benefit that is foregone when one alternative is chosen over another. It is the cost of making a decision in terms of the next best alternative that was not chosen. In a business context, opportunity cost can refer to the cost of not pursuing a particular course of action, such as choosing not to invest in a certain project or invest in a certain technology.
Explanation:
The cost of waste is calculated by subtracting the number of cakes sold from the number of cakes ordered, and then multiplying this difference by the cost of the cakes.
In this case, 28 - 12 = 16, and 16 x $16 = $256.
The opportunity cost is the difference between what was earned by selling the cakes and what it cost to purchase the cakes. In this case, $22 - $16 = $6, and 28 x $6 = $168.
Therefore, the correct option is Option D.
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If a firm's marginal product of labor is less than its average product of labor, then an increase in the quantity of labor it employs definitely will
A) not change its average product of labor.
B) decrease its average product of labor.
C) increase its marginal product of labor.
D) decrease its total product.
If a firm's marginal product of labor is less than its average product of labor, then an increase in the quantity of labor it employs definitely will decrease its average product of labor.
What is marginal product, to provide an example?A restaurant kitchen is a great example of the marginal output of labor. The restaurant cannot generate anything without cooks. After hiring one cook, the restaurant might generate ten additional meals, giving rise to a positive MPL of ten.
The same thing as marginal product is what?The neoclassical theory of competitive markets states that the marginal output of labor is equal to the real pay. In aggregate models of perfect competition, when a single good is produced and used for both consumption and capital purposes, the marginal product of capital is equal to its rate of return.
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California taxpayers are generally opposed to higher taxes. They tend to make exceptions and to support new taxes or higher tax rates when ______.
A. the economy is bad and there is a budget deficit that needs to be fixed
B. the taxes are dedicated for specific purposes C. there is a Democratic governor in charge
D. there is Republican governor in charge
California taxpayers are generally opposed to the higher taxes. They tend to make exceptions and to support the new taxes or higher tax rates when economy is bad and there is budget deficit that needs to be fixed.
Who is a taxpayer?A taxpayer is an organization that has tax obligations. Today's taxpayers may own an identification or reference number that a government has provided to people or organizations. Income taxes and/or property taxes assessed against real estate owners are just two examples of the many various types of taxes (such as homes and automobiles). The workforce of a country is frequently referred to as a "taxpayer," as they pay taxes that fund government services and activities. The money that the people pay forms a part of the public funds, which are all the resources that the government uses or puts to use in order to satisfy present or future demands. Businesses are taxed in the same way as people are, thus their earnings and outgoings are taxable.
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When bank examiners conclude that a bank has serious financial problems, the FDIC can:
When bank examiners conclude that a bank has serious financial problems, the FDIC can: cover all deposits at a troubled bank, including those over $250,000, to restore the public's confidence in the financial system.
What are financial problems,?Generally, If you have financial difficulties, it indicates that you are unable to pay your bills, either in the short or the long term. Debt makes it more difficult to handle finances and reduces one's buying power.
When it comes to stress, financial troubles become a source until all obligations are paid in full. It is necessary to find a solution in order for financial obligations to be satisfied.
When bank examiners come to the conclusion that a bank has substantial financial issues, the FDIC has the ability to cover all deposits at a failing bank, even those that are more than $250,000, in an effort to restore public trust in the financial system.
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The ________ function of a supply chain is responsible for selecting transportation carriers and managing company-owned fleets of vehicles.
a. integration
b. scheduling
c. procurement
d. logistics
The logistics function of a supply chain is responsible for selecting carriers and managing fleets of company-owned vehicles. Option D is correct.
What is a supply chain?It corresponds to the set of integrated processes that coordinate the product cycle from its origin to delivery to the final consumer.
Therefore, the logistics function of a supply chain is essential for the product to reach the customer in the right type, in the right quantity and at the right time.
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an installment sale of a taxpayer's entire interest in a passive activity triggers recognition of the suspended losses. True/False ?
The statement that an installment sale of a taxpayer's entire interest in a passive activity triggers recognition of the suspended losses is True.
What is the Interest tax?It should be noted that most interest is taxed at the same federal tax rate as the amount that one earned as income however this encompass the Interest on deposit accounts, such as checking and savings accounts.
It should be noted that the installment sale of a taxpayer's entire interest can be recognized as the passive activity thjat triggers recognition of the suspended losses.
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HandyBrands Inc., a consumer goods company, engages in the design, manufacture, sourcing, and sale of apparel essentials in the United States and internationally. They have a very good e-tailing portal. Online shopping constitutes 40% of their sales. Recently, they have faced complaints by customers that the orders are not getting processed. The reason was a Web site with similar content and an identical domain name. HandyBrands Inc. should take the help of _____.
The reason was a Web site with similar content and an identical domain name. HandyBrands Inc. should take the help of the Anticybersquatting Consumer Protection Act.
Social elements additionally affect the shopping behavior of customers. The essential social elements are reference businesses, circle of relatives, position, and status. Reference corporations have the capability in forming someone's attitude or behavior. The effect of reference groups varies across products and types.
Product, rate, promotion, and area shape the 4 ps of the advertising and marketing mix. these are the key factors that are involved in introducing a service or product to the general public.
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_____ is a method that employees use to steal cash after it has been received and recorded in the company books.
A. Racketeering
B. Phony disbursement
C. Skimming
D. Embezzlement
Embezzlement is a method that employees use to steal cash after it has been received and recorded in the company books. (Option D).
What is Embezzlement?White-collar crime known as embezzlement occurs when an individual or group willfully misappropriates funds that have been entrusted to them. The assets in this type of fraud are gained legitimately and belong to the embezzler, but they are later used against their will.
Because of this, dishonest employees may embezzle money that has been rightfully received and recorded in the business's books usually for personal purposes.
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trans union corporation issued 5,000 shares for $50 per share in the current year, and it issued 10,000 shares for $37 per share in the following year. the year after that, the company reacquired 20,000 shares of its own stock for $45 per share. determine the impact (increase, decrease, or no change) of each of these transactions on the following classifications: Sold 5,000 Shares what is: total Assets? Total Liabilities? Total Stockholders Equity? Net Income?
Sold 10,000 Shares: what is: total Assets? Total Liabilities? Total Stockholders Equity? Net Income?
Purchased 20,0000 of Treasury Stocks: what is: total Assets? Total Liabilities? Total Stockholders Equity? Net Income?
The financial statements are the legally required documents that must be created by the accounting team in order to demonstrate how each company activity affects the relevant accounts.
What are financial statements?Financial statements are documents that describe a company's operations and financial performance. Government organizations, accounting companies, etc. frequently audit financial accounts to guarantee accuracy and for tax, financing, or investment purposes.The records of a company's financial situation and operations during a specific time period are called financial statements. Financial statements display a company's financial health and success. The income statement, balance sheet, and cash flow statement are the three primary financial statements.The balance sheet, the income statement, and the cash flow statement are the three primary forms of financial statements. Together, these three statements display a company's assets, liabilities, revenues, expenses, and cash flows from financing, investing, and operating operations.Given data :
1. In case of Sold 5,000 Shares:
The total Assets Increased by $250,000 i.e (5,000 × $25) as it increased the cash balance
Total Liabilities = No Change
Total Stockholders Equity = Increased by $250,000 as it increased the overall equity
Net Income = No Change.
2. In case of sale of 10,000 shares
The total Assets Increased by $370,000 i.e (10,000 × $37) as it increased the cash balance
Total Liabilities = No Change
Total Stockholders Equity = Increased by $370,000 as it increased the overall equity
Net Income = No Change.
3. In case of Purchased 20,000 of Treasury Stock
The Total Assets Decreased by $900,000 i.e (20,000 × $45) as it reduced the cash balance
Total Liabilities = No Change
Total Stockholders Equity Decreased by $900,000 as it decreased the overall equity
Net Income = No Change.
Note:
The number of shares given i.e 6,800, 11,800 and 21,800 are incorrect use the 5,000 shares, 10,000 shares and 20,000 shares and we did the computation accordingly.
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Which of the following are controls used by governments to try to offset the negative effects of setting a maximum price? (choose all that apply)
-Rationing
-Subsidies
-Cost-control
-Universal price-fixing
Rationing, Subsidies, Cost-control and Universal price-fixing are controls used by governments to try to offset the negative effects of setting a maximum price.
Which of the subsequent is an illustration of a pricing incentive?Price incentives like sales and discounts encourage customers to purchase more items at a lower price. High pricing also encourage current and potential suppliers to increase production of a costly good in order to increase profits.
When a benefit accrues to a third person, there is a positive externality. By taxing products and services that result in spillover costs, the government can deter negative externalities. By providing subsidies for products and services that have positive spillover effects, the government can promote positive externalities.
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lila is a marketing manager for tremont manufacturing. her boss asked her to evaluate a new-product idea. one of the things lila wants to determine is how much of this product her firm would have to sell in order to break even. in order to compute this break-even level of sales, she will need to know the price of the good, the total fixed costs, and variable cost of producing each unit.
Which among the following best illustrates why businesses using average-cost pricing could lose money?
What is a manufacturing example?What is a Manufacturing Example? Manufacturing is the process of creating new goods from components or raw materials. Automotive businesses, bakeries, shoemakers, and tailors are all examples of manufacturing since they all produce goods rather than provide services.
What does manufacturing serve as a means for?What Does Manufacturing Have as a Goal? The process of transforming a raw substance into a finished, physical product is known as manufacturing. Making a process more effective while it transforms certain resources into other resources, frequently with the intention of becoming sold to a client, is what manufacturing includes.
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What the type of ad in which a broker attempts to promote or solicit real estate activity without disclosing the fact that they are a licensed real estate broker?
Blind ad
A: Blind ad is the type of ad in which a broker make an attempt to promote or solicit real estate activity without revealing the fact that they are a licensed real estate broker.
A blind ad is a type of advertisement which contains no identifying information about who is placing the ad. For instance, a few examples of blind include an ad in the newspaper selling an automobile; an unknown employer advertising an upcoming job position; a sign with a picture of a house, and a phone number to call on for more information.
The situation where a broker places an ad to promote or solicit real estate activity without disclosing their identity that they are a licensed real estate broker is known as a blind ad.
"
Complete question:
What the type of ad in which a broker attempts to promote or solicit real estate activity without disclosing the fact that they are a licensed real estate broker?
A. Blind ad
B. Open ad
C. Box ad
D. None of them
"
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perform a horizontal analysis on the following information providing both the dollar amount and percentage change (decrease in amount should be indicated by a minus sign. round your percentages to 1 decimal place.): 2021 2020 cash $ 640,000 $ 210,000 accounts receivable 910,000 760,000 inventory 750,000 550,000 long-term assets 1,900,000 2,200,000 total assets $ 4,200,000 $ 3,720,000
Increase (Decrease) Amount % Cash Accounts receivable Inventory Long-term assets Total assets
By examining financial records from different years, horizontal analysis, also known as trend analysis, examines positive or negative patterns within an organization.
What characteristics define a good horizontal analysis example?
The base year and comparative year are selected as the first stage in computing the percentage change. To calculate the dollar change, divide the result by the base year after deducting the value from the value of the comparative year. Next, the outcome is repeated with 100.
What tool is used for horizontal analysis?
Answer. examining patterns It serves as an essential tool for horizontal analysis. The ratios of many financial statement items for various time periods are calculated in this study, and the findings are then compared.
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What is an important rule to follow concerning typography?
Answer:
Use a consistent font throughout the document.
Explanation:
using too many different fonts can make the document look messy and unprofessional.
If the corporate income tax induces businesses to reduce their capital investment, then
A. corporate shareholders benefit from the tax.
B. workers bear some of the burden of the tax.
C. the tax achieves the goal of vertical equity.
D. the tax does not have any deadweight loss.
If the corporate income tax induces businesses to reduce their capital investment, then workers bear some of the burden of the tax. Hence, option (b) is relevant.
Give a brief account on corporate tax.A corporation's profits are subject to a corporate tax. Taxes are deducted from a company's taxable income, which is determined by subtracting revenue from costs for selling and marketing, general and administrative (G&A), research and development, depreciation, and other operating expenses. Corporate tax rates differ greatly amongst nations, with some having low rates that are regarded as tax havens. The effective corporate tax rate—the amount a firm actually pays—is typically lower than the statutory rate, which is the declared rate before any deductions. Many different tax deductions, government subsidies, and loopholes can be used to lower corporate taxes.
The Tax Cuts and Jobs Act (TCJA), which President Donald Trump signed into law in 2017 and which took effect in 2018, resulted in the current flat 21% federal corporate tax rate in the United States. Before, the top corporate income tax rate in the United States was 35%.
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In the service-profit chain, customer satisfaction leads to customer loyalty, and results in _____.
revenue growth and profitability
In the service-profit chain, customer satisfaction leads to customer loyalty, and results in revenue growth and profitability
What is customer satisfaction profit chain?A theoretical framework known as the Satisfaction Profit Chain (SPC) connects attribute-level perceptions, overall customer satisfaction, consumer intentions/behaviors, and financial results.According to certain studies, higher levels of customer satisfaction are followed by higher levels of client loyalty, which results in higher profitability. According to other studies, happy clients can boost profits by recommending new clients through encouraging word-of-mouth spread.Customers and employees are valued highly in the service profit chain. Relationships between profitability, customer and staff satisfaction, and productivity were established via the service profit chain.To learn more about service profit chain. refer,
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When the policies of a non-profit organization and the beliefs or policies of a donor do not match or are contrasting, it leads to a _____
When the policies of a non profit organization and the beliefs or policies of a donor do not match or are contrasting, it leads to a conflict.
There are a variety of policies that non profit organizations must follow in order to remain operational. These policies include financial policies, fundraising policies, and policies regarding the distribution of resources for a non profit.
Non profit organizations must be careful to adhere to these policies, as any deviations could jeopardize their tax-exempt status. Additionally, non profit organizations must be transparent in their policies and procedures, as this is essential to maintaining the public's trust and support.
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Excerpts from Neuwirth Corporation's comparative balance sheet appear below:Ending Balance Beginning BalanceCash and cash equivalents $44,000 $ 34,000 Accounts receivable $31,000 $ 35,000 Inventory $72,000 $ 75,000 Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?
The change in Accounts Receivable is added to net income; The change in Inventory is added to net income.
What is net income?
Net income (NI), also known as net profits, is calculated by deducting sales from cost of goods sold, selling, general and administration costs, operating expenses, depreciation, interest, taxes, and other expenses. This number can be used by investors to gauge how much a company's revenue exceeds its expenses. This number, which serves as a gauge of a business' profitability, may be seen on the income statement.
Net income is used by businesses to calculate their earnings per share. Net income is usually referred to as the bottom line by business analysts since it is the figure at the bottom of the income statement. Analysts in the UK call NI profit attributable to shareholders.
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a company has been invited to invest $4 million in a partnership and receive a guaranteed total amount o of $10 million after 6 years. by corporate policy the marr is always established at 2% above the cost of capital. the inflation rate during the 6 year is expected to average 4% per year. if the real interest rate paid on capital is 12% per year, is this investment economically justified
For each year of a machine's maximum remaining useful life of two years, it has an equivalent annual value of $-200,000. If kept for 1, 2, or 3 years, a suitable replacement is found to have equivalent annual worth values of $-300,000, S- 225,000, and $-275,000, respectively. Use an annual interest rate of 18%.
What is annual value?annual value means, in relation to any land, the rent at which the land might reasonably be expected to be let from year to year, if the tenant undertook to pay all usual tenant’s rates and taxes and to bear the costs of the repairs and insurance and other expenses, if any, necessary to maintain the land in a state to command that rent.An amount equal to the rent at which any property might reasonably be expected to let from year to year if the tenant undertook to pay licence duties (if any), and the landlord undertook to pay the rates and fees and to bear the cost of repairs, insurance and other expenses (if any), necessary to maintain the property in a state to command that rent or the actual rent received if this is greater than the rent at which the property might reasonably be expected to let.To learn more about taxes refer to:
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public goods are generally provided by the government rather than profit-maximizing firms because: g
Because public goods can be utilized by one individual without affecting the quantity that is available to others, governments typically offer them rather than profit-maximizing businesses.
What does "firm" mean?A business that seeks to make money by offering goods and services is known as a firm. Firm and business are both acceptable terms. Different organizational structures for businesses, including corporations and single proprietorships, are available.
What is a firm's primary goal?According to the traditional view of the firm, profit maximization is a company's main goal. Price & output of a specific product are set by perfect competition with the only goal of satisfying consumer demand under the assumption of given taste & technological advancements.
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Directional strategies have both unsystematic and _______ risk exposure, whereas non directional strategies attempt to exploit a temporary ________ between assets
A transient mispricing between assets is what non-directional strategies aim to take advantage of, whereas directional strategies expose themselves to both systematic and unsystematic risk.
What are directional hedge fund strategies?Strategies for directional hedge funds. In the directional method, managers wager on the market's directional movements (long or short) based on their expectation that a trend would persist or change direction for a while.
In the world of hedge funds, multi-strategy funds have the most varied portfolios. Multi-strategies are hedge fund strategies that integrate various single hedge fund strategies into a single portfolio and differ greatly from one another. Such portfolios typically contain a range of long-short, relative value, and event-driven strategies.
It comes in 4 main varieties: forwards and futures, options, warrants, and swaps. explore more. As a result, the fund management will buy companies they believe are undervalued and sell those they believe are overvalued. To make an investing decision, several different strategies are used.
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a measure of any customer sentiment is considered effective as long as . group of answer choices customers are not confused variations in the measure are sensitive to the changes in that sentiment customers are willing to respond customers respond truthfully it provides favorable ratings
Monitor the social media platforms where the majority of your customers are as well as hashtags and keywords related to your brand in order to measure customer sentiment.
Why track the feelings of customers?It lets you know why your customers feel the way they do and, most importantly, why they like or dislike your brand when they interact with it. Nearly every other metric is connected to customer sentiment.
What is sentiment analytics for customers?Customer sentiment analysis, according to KM World, is the process of processing information to ascertain a customer's opinion. An organization can benefit from the time customers spend asking questions, resolving issues, and sharing both positive and negative experiences.
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• ABC Travels is a travel company that offers foreign tour packages. The company wants to know what AMERICAN travelers look for when booking a holiday to a foreign country. The typical customers for this company are usually a family group of four. The family group usually has two children.
• (a) Formulate at least two research questions for the problem.
• (b) State the unit of analysis of your study.
• (c) What is your independent and dependent variable?
• (d) State your research objectives and the research hypotheses.
Answer:
a) Research questions:
What factors do American families consider when choosing a foreign holiday destination?What are the most important factors that influence the decision to book a foreign tour package with ABC Travels?b) The unit of analysis of the study is American families.
c) The independent variable is the factors that American families consider when choosing a foreign holiday destination. The dependent variable is the decision to book a foreign tour package with ABC Travels.
d) Research objectives:
To identify the factors that American families consider when choosing a foreign holiday destination.To determine the most important factors that influence the decision to book a foreign tour package with ABC Travels.Research hypotheses:
The cost of the tour package is a significant factor in the decision to book a foreign tour package with ABC Travels.The destination of the tour package is a significant factor in the decision to book a foreign tour package with ABC Travels.Blink, Inc. has a 1,000 shares of $10 par, %5 preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total19500; $10 x .05 x 1,000 shares = 500. Total dividend is $20,000. $20,000 - $500 = 19,500 common shareholders
Additional Paid-In-Capital.
A shareholder of an organization is a character or criminal entity that is registered by means of the employer because of the legal proprietor of shares of the percentage capital of a public or non-public organization. Shareholders can be day-to-day participants in an enterprise.
Someone who owns shares in an agency and consequently gets a part of the agency's income and the right to every day vote on how the agency is managed: Shareholders might be voting on the proposed merger of the groups next week.
Shareholders are owners of the agency, technically element-owners if there is more than one, however, they aren't constantly involved in the going-for walks of the commercial enterprise that duty is left every day by the administrators and corporation management. however, organization directors also can be shareholders.
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Which of the following structures is divided into several distinct business units, each of which has its own profit and loss center?
a. integrated structure
b. functional structure
c. formalized structure
d. multi divisional structure
The multi-divisional structures is divided into several distinct business units, each of which has its own profit and loss center.
Forms with several divisions that are all a part of one legal organisation. Although management in the central office runs the company, independent divisions are in charge of making the majority of operational decisions. Typically, the central office will give the divisions services like management know-how and funding.
A certain organizational structure known as the multidivisional form divides a company into divisions that are somewhat independent and have their own unitary structures. The business is generally split up into corporate organizations, each of which is in charge of a certain production product or product line. The top management is based in the central office, where they coordinate the departments and create overarching business plans.
Hence the correct option is D.
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Innovation involves using old knowledge to transform organizational processes or create commercially viable products and services. A. TrueB. False
False. Innovation involves using new knowledge to transform organizational processes or create commercially viable products and services. Because an innovation must always use new knowledge.
Innovation is a renewal of various resources so that these resources have more benefits for humans. The innovation process is heavily influenced by advances in technology and science because these two things make it easier to produce something new and different.
Basically the benefit of innovation is to perfect or improve the function of using a product or resource so that humans get more benefits. Innovation occurs in various fields of life, starting from the world of business, education, communication, and so on. This innovation process occurs continuously in human life because of the desire to make things easier and faster. One example of innovation is the development of telephones that change and become more sophisticated from time to time.
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What Human Resource Policy changes do you think will have to become permanent as a result of the pandemic and why?
As businesses shifted to remote working and managed employees who worked from different locations, the pandemic marked a new chapter in organizational life and enhanced the necessity of human resources management.
Since the world has adapted to the so-called "new normal," organizations must now adhere to new working policies and adopt the standards that guarantee workers' safety and well-being whilst maintaining the organization's effectiveness.
What is human resource policy?Human resource policies serve as ongoing guidelines for the method of personnel management that an organization intends to use.
They serve as specific instructions to HR managers on a variety of employment-related topics and outline the organization's intentions regarding various facets of human resource management, including hiring, promoting, compensating, training, and making selections, among other things.
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John presented to the ER with rectal bleeding. Earlier in the day. John had a colonoscopy that revealed a polyp. John's physician used hot forceps to remove the polyp. After exam in the ER, John is taken back to the GI suite where it is revealed that during the polyp removal procedure, John's physician inadvertently perforated his colon. The perforated colon represents which of the following? damages breach duty causation
The perforated colon represents Breach.
Breach refers to the violation of a legal obligation. In this case, the legal obligation is the duty of care the physician had to John. The physician had a duty to provide John with the proper care and attention during the procedure, and in this case, the physician violated that duty by inadvertently perforating John's colon.
The physician's negligence in this regard is what constitutes a breach, and it is the breach that is responsible for the damage sustained by John. By breaching the duty of care, the physician caused the damage to John, and it is this breach of duty that makes the physician liable for the damage.
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horizontal analysis of income statement for 20y2, macklin inc. reported a significant decrease in net income. at the end of the year, john mayer, the president, is presented with the following condensed comparative income statement:
The following abbreviated comparative income statement is submitted to the president; round the numbers to 46.3% by adding -16100/34800 x 100%.
This error is caused by rounding off the numbers. You will receive -16100/34800 x 100% = -46.26 and round that to 46.3%.
A company's financial success over a particular accounting period is reported using one of the three key financial statements, the income statement. The cash flow statement and the balance sheet are the other two important statements.
The income statement focuses on the company's earnings for a specific time period, including profits and losses. An income statement, sometimes referred to as a profit and loss (P&L) statement or a summary of sales and expenses, offers crucial information about a company's operations, the effectiveness of its leadership, underperforming industries, and performance in comparison to peers in the same sector.
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In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business.
The long-run aggregate supply curve would shift to the right if countries with high minimum wages and lengthy and expensive procedures for obtaining business licenses were to lower both the minimum wage and these requirements.
In the long run, what happens to the aggregate supply?Because it is vertical in nature, the traditional long-run aggregate supply does not shift with the price level. This is because, in the long run, businesses do not alter their output because resources adjust to the price change.
Why does the aggregate supply curve change over time?Changes in the variables that have an effect on an economy's potential output are the only things that can cause the long-run aggregate supply curve to change. Changes in technology, capital, natural resources, and labor are all factors that alter the aggregate supply over the long term.
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question content area snipe company has been purchasing a component, part q, for $19.20 per unit. snipe is currently operating at 70% of capacity, and no significant increase in production is anticipated in the near future. the cost of manufacturing a unit of part q is estimated as follows:
The loss the company is incurring by purchasing Q = $19.20 - 17.12
Loss = $2.08/Q
How do you calculate the direct costs?When there is spare capacity, only the relevant costs are identified to determine whether the option to buy or make is worthwhile, resulting in the corporation incurring a meaningful loss on the purchase of Q rather than making it.
Since the factory fixed overhead is to be paid regardless of manufacturing Q, it should not be included in the estimations and the total cost of manufacturing Q should be
Direct Material + Direct Labor + Variable overheads
So Direct costs = 11.5 + 4.5 + 1.12 = $17.12
So the loss the company is incurring by purchasing Q = $19.20 - 17.12
Loss = $2.08/Q
Differential effect on the income is $2.08/ purchase of Q.
This can be avoided, thus Snipe should think about producing Q rather than buying it because doing so would allow it to save money as no production increases are currently scheduled.
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