Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $37 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 (6,000 units per batch) Product-level supervisory salaries Allocated facility-level costs $6 $5 $4 $48,000 $49,000 $43,000 The company expects an annual need for 6.000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,800 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 $37 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 (6,000 units per batch) Product-level supervisory salaries Allocated facility-level costs $6 $5 $4 $48,000 $49,000 $43,000 The company expects an annual need for 6.000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,800 a month. If the company decides to make the parts, total costs will be:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The company expects an annual need for 6,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to
another company for $3,800 a month. If the company decides to make the parts, total costs will be:
Multiple Choice
O
$53.600 more than the switches are purchased
$43.000 less than the switches are purchased
$10.500 more then the chese purchased
53.400 than the switches are purchased
Transcribed Image Text:Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $37 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 (6,000 units per batch)
Product-level supervisory salaries
Allocated facility-level costs
$6
$5
$4
$48,000
$49,000
$43,000
The company expects an annual need for 6.000 switches. If the company makes the product, it will have to utilize factory space currently being leased to
another company for $3,800 a month. If the company decides to make the parts, total costs will be:
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