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Business, 22.12.2020 20:20 john8016

10. Phelps Industries is a multi-product company that currently manufactures 30,000 units of part ST35 each month for use in production of its products. The facilities now being used to produce part ST35 have a fixed monthly cost of $150,000 and a capacity to produce 35,000 units per month. If Phelps were to buy part ST35 from an outside supplier, the facilities would be idle, but its fixed costs would continue at 40% of their present amount. The variable production costs of Part ST35 are $11 per unit If Phelps Industries continues to use 30,000 units of part ST35 each month, it would realize a financial advantage by purchasing this part from an outside supplier only if the supplier's unit price is less than: A. $11.00 B. $14.00 C. $13.00 D. $16.00 E. None of the above

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