Epsilon Co. can produce a unit of product for the following costs: Direct material $8 Direct labor
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Question:
Epsilon Co. can produce a unit of product for the following costs:
Direct material | $8 |
Direct labor | $24 |
Overhead | $40 |
Total costs per unit | $72 |
An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:
A. Buy since the relevant cost to make it is $72.
B. Make since the relevant cost to make it is $56.
C. Buy since the relevant cost to make it is $48.
D. Make since the relevant cost to make it is $48.
E. Buy since the relevant cost to make it is $56.
Related Book For
Managerial economics applications strategy and tactics
ISBN: 978-1439079232
12th Edition
Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris
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