Scenario 2.6
You currently purchase a part used in your production process from an outside supplier,and have decided to begin making this part in-house.You have two equipment options for moving production in-house: special-purpose equipment and general-purpose equipment.Cost information for these two options is as follows:

-Use Scenario 2.6 to find the truth.What are total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units?
A)$400,000
B)$500,000
C)$800,000
D)$850,000

Question

Scenario 2.6
You currently purchase a part used in your production process from an outside supplier,and have decided to begin making this part in-house.You have two equipment options for moving production in-house: special-purpose equipment and general-purpose equipment.Cost information for these two options is as follows:
 
-Use Scenario 2.6 to find the truth.What are total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units?
A)$400,000 
B)$500,000 
C)$800,000 
D)$850,000

Quizplus · Accepted Answer

The total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units is $800,000. This is calculated by considering the fixed and variable costs associated with producing 40,000 units using the special-purpose equipment.

Scenario 2.6 You Currently Purchase a Part Used in Your Production Process