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SECTION A (30 marks) Select the best answer to each question. Fill in your answer on the Multiple Choice Seandron Sheet using a pencil. Workings
SECTION A (30 marks) Select the best answer to each question. Fill in your answer on the Multiple Choice Seandron Sheet using a pencil. Workings are not required to be shown and will not be graded. Each question carries i mark Use the following information to answer Questions 12. Rams Company needs 20,000 parts to use in its production cycle, Steelers Inc. has offered to sell the parts to Rams for $44 per unit. However, 60% of Rams' fixed overhead would still continue regardless of the decision made. The following information is given Cost to Rams to make the part (per unit) is: Direct materials Direct labour Fixed overhead $12 $26 $10 1. In deciding whether to make or buy the part, Rams' total relevant costs to make the part are: A. $989,000 B. $960,000 C. $880,000 D. S840,000 E. $760,000 2. What decision should Rams take and calculate the total cost advantage that would result: A. Make part, resulting in $40,000 cost advantage B. Make part, resulting in $120,000 cost advantage C. Buy part, resulting in $80,000 cost advantage D. Buy part, resulting in $120,000 cost advantage E. Some other answer 3. A standard cost A. incorporates the opportunity cost of one unit of production. B. shows the actual cost from previous years C. is useful in calculating equivalent units. D. is the average cost within an industry E. is a budget for the production of one unit of a product or service
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