### Outsourcing Decision Animals United currently outsources pet beds for their product line. The beds are purchased for $40 each. The company is considering making the beds instead and has examined the costs involved. The costs are as follows: - **Unit-level material cost:** $8 - **Unit-level labor cost:** $3 - **Unit-level overhead cost:** $2 - **Batch-level cost (100 per batch):** $150 - **Product-level supervisor salary:** $20,000 - **Allocated facility level cost:** $16,000 Assume the company has demand for 500 beds. If they decide to make the beds, what are the total relevant costs? **Key Question:** Should Animals United buy or make the beds?
### Outsourcing Decision Animals United currently outsources pet beds for their product line. The beds are purchased for $40 each. The company is considering making the beds instead and has examined the costs involved. The costs are as follows: - **Unit-level material cost:** $8 - **Unit-level labor cost:** $3 - **Unit-level overhead cost:** $2 - **Batch-level cost (100 per batch):** $150 - **Product-level supervisor salary:** $20,000 - **Allocated facility level cost:** $16,000 Assume the company has demand for 500 beds. If they decide to make the beds, what are the total relevant costs? **Key Question:** Should Animals United buy or make the beds?
Chapter1: Financial Statements And Business Decisions
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