Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $30 each. The company is considering making theswitches internally at the following projected annual production costs:Unit-level material costUnit-level labor costUnit-level overheadBatch-level set-up cost (7,000 units per batch)Product-level supervisory salariesAllocated facility-level costsMultiple ChoiceThe 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 anothercompany for $2,800 a month. If the company decides to make the parts, total costs will be:$33,000 less than if the switches are purchased.$33,400 less than if the switches are purchased.$10,600 more than if the switches are purchased.$6$5$4$43,600 more than if the switches are purchased.$38,000$44,000$33,000

To calculate whether the cost of making the parts is higher than purchasing , relevant making cost…

Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $30 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 Multiple Choice $6 $5 $4 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 $2,800 a month. If the company decides to make the parts, total costs will be: $33,000 less than if the switches are purchased. $38,000 $44,000 $33,000

Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $30 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 Multiple Choice $6 $5 $4 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 $2,800 a month. If the company decides to make the parts, total costs will be: $33,000 less than if the switches are purchased. $38,000 $44,000 $33,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 23E: Silven Company has identified the following overhead activities, costs, and activity drivers for the...

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