Answer:
The accurate choice is:
b) lower prices for consumers and producers
Explanation:
In the USA, food is a crucial necessity that the government ensures is accessible to its citizens. Many agricultural goods receive government subsidies, aiding both farmers (producers) and consumers.
Producers benefit from subsidies through incentives, agricultural tools, and grants. Conversely, consumers gain benefits from the lowered prices of agricultural crops.
To record the transaction, initiate with a loan entry of $3 million: Debit Bank $3,000,000 and Credit Loan $3,000,000. Next, the finance charge at a rate of 3% totals $90,000: Debit Finance Charge $90,000 and Credit Bank $90,000. Finally, the interest at 7% accumulates to $70,000, leading to the entry: Debit Interest Expense $70,000 and Credit Interest Payable $70,000.
$8,400
The calculation for the annual financial benefit (loss) for the organization is detailed below:
Particulars Make Buy
Direct material $53,600 (8,000 units × $6.70)
Direct labor $64,800 (8,000 units × $8.10)
Variable manufacturing overhead $8,800 (8,000 units × $1.10)
Supervisor's salary $16,000 (8,000 units × $2)
Fixed manufacturing overhead $2,000
Opportunity cost $16,000
Purchase cost $169,600 (8000 × $21.20)
Total relevant cost $161,200 $169,600
Financial (loss) is = $161,200 - $169,600 = -$8,400
We simply compared the make and buy costs and found that purchasing incurs a higher cost than manufacturing, leading to an excess expense of $8,400 if the external supplier is chosen.
