Lopez Company makes and sells a single product. Lopez incurred the following costs in its most recent fiscal year.

Lopez could purchase the products that it currently makes. If it purchased the items, the company would continue to sell them using its own logo, advertising program, and sales staff.
Required
Identify each cost as relevant or irrelevant to the outsourcing decision and indicate whether the cost is fixed or variable relative to the number of products manufactured andsold.

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Cost Items Appearing on the Income Statement Materials cost (S7 per unit) Company president's salary Depreciation on manufacturing equipment Customer billing costs (1% of sales) Rental cost of manufacturing facility Advertising costs ($250,000 per year) Labor cost (S5 per unit Sales commissions (2% of sales) Salaries of administrative personnel Shipping and handling (S0.25 per unit) Depreciation on office furniture Manufacturing supplies (S0.25 per unit) Production supervisor's salary