Genent's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:

The maximum price that Genent's Preserves should be willing to pay for the decorative jars is ________.
A) $0.64 per jar
B) $0.87 per jar
C) $0.49 per jar
D) $2.26 per jar

Question

Genent's Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:

The maximum price that Genent's Preserves should be willing to pay for the decorative jars is ________.

The maximum price that Genent's Preserves should be willing to pay for the decorative jars is ________.
A) $0.64 per jar 
B) $0.87 per jar 
C) $0.49 per jar 
D) $2.26 per jar

Quizplus · Accepted Answer

Considering only quantitative factors, the company should not pay more than the avoidable costs of $2.26 per jar. There may be qualitative factors that are also important.

Genent's Preserves Currently Makes Jams and Jellies and a Variety