### 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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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### 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?
Transcribed Image Text:### 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?
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