Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs:

Direct materials	$120,000
Direct labor	25,000
Variable overhead	45,000
Fixed overhead	30,000

If Tex's Manufacturing Company purchases the component externally, $20,000 of the fixed costs can be avoided. At what external price for the 100 units is the company indifferent between making or buying?

$220,000

$190,000

$200,000

$210,000

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct materials	$13,000
Direct labor	15,000
Variable overhead	3,000
Fixed overhead	7,000

None of Criguis fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct materials	$13,000
Direct labor	15,000
Variable overhead	3,000
Fixed overhead	7,000

None of Criguis fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct materials	$13,000
Direct labor	15,000
Variable overhead	3,000
Fixed overhead	7,000

None of Criguis fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

Crigui Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct materials	$13,000
Direct labor	15,000
Variable overhead	3,000
Fixed overhead	7,000

None of Criguis fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4,000 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Crigui would be willing to accept to acquire the 60,000 units externally?

$34,000

$35,000

$38,000

$42,000

What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment?

It is relevant since it reduces the cost of the new equipment.

It is not relevant since it reduces the cost of the old equipment.

It is not relevant to the decision since it does not impact the cost of the new equipment.

It is relevant since it increases the cost of the new equipment.

Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

	Old Machine	New Machine
Price	$300,000	$600,000
Accumulated Depreciation	90,000	-0-
Remaining useful life	10 years	-0-
Useful life	-0-	10 years
Annual operating costs	$240,000	$180,600

If the old machine is replaced, it can be sold for $24,000. Which of the following amounts is relevant to the replacement decision?

$59,400

$90,000

$210,000

$300,000

The potential effects of the decision to eliminate a line of business on existing employees and the community are

ignored in incremental analysis.

quantitative factors.

qualitative factors.

opportunity costs.