ColorPro uses part 87A in the production of color printers. Unit manufacturing c

Question

ColorPro uses part 87A in the production of color printers. Unit manufacturing costs for part 87A are:

$8

2

1

4

ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12. Fixed overhead is unavoidable.

Refer to Figure 13-2. Which of the following is a qualitative factor that might affect ColorPro's decision?

Filbert has an outstanding reputation for quality.

Ordering from Filbert would give ColorPro a chance to see how well Filbert could meet JIT standards for ColorPro's other products.

Filbert is known for the reliability of its products.

Making the part in-house would help ColorPro avoid layoffs of direct and indirect labor.

All of these

$8

2

1

4

Explanation / Answer

Answer: All the options given are the qualitative factor that might affect ColorPro's decision, so the correct option is All of these.

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