Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $39 each. The company is considering making the switches internally at the following projected annual production costs Unit-level material cost Unit-level labor cost Unit-level overhead Satch-level set-up cost (7,000 units per batch); Product-level supervisory salaries Allocated facility-level costs $ $ $ 8 7 6 $49,000 $49,500 $44,000 The company expects an annual need for 7,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,900 a month. If the company decides to make the parts, total costs will be:
Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $39 each. The company is considering making the switches internally at the following projected annual production costs Unit-level material cost Unit-level labor cost Unit-level overhead Satch-level set-up cost (7,000 units per batch); Product-level supervisory salaries Allocated facility-level costs $ $ $ 8 7 6 $49,000 $49,500 $44,000 The company expects an annual need for 7,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,900 a month. If the company decides to make the parts, total costs will be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $39 each. The company is
considering making the switches internally at the following projected annual production costs:
Unit-level material cost
Unit-level labor cost
Unit-level overhead
Batch-level set-up cost (7,000 units per batch)
Product-level supervisory salaries
Allocated facility-level costs
$
$
$
7
6
$49,000
$49,500
$44,000
The company expects an annual need for 7,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to
another company for $3,900 a month. If the company decides to make the parts, total costs will be:
Transcribed Image Text:Multiple Choice
$19,300 more than if the switches are purchased
$53.300 more than if the switches are purchased.
$30,200 less than if the sweches are purchased
$44,000 less than if the switches are purchased
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