Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
The fixed factory overhead costs are unavoidable.
-Assuming no other use of their facilities, the highest price that Speck should be willing to pay for the part is
A) $24.
B) $28.
C) $16.
D) $22.

Question

Speck Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:
  The fixed factory overhead costs are unavoidable.
-Assuming no other use of their facilities, the highest price that Speck should be willing to pay for the part is
A) $24. 
B) $28. 
C) $16. 
D) $22.

Quizplus · Accepted Answer

The highest price Speck should be willing to pay for the part is the cost they would incur to produce it themselves, which is $24.

Speck Company Manufactures a Part for Its Production Cycle