TELOXY ENGINEERING $($A$)$

Teloxy Engineering has received a one$-$time contract to design and build $10,000$ units of a new product. During the proposal process, management felt that the new product could be designed and manufactured at a low cost. One of the ingredients necessary to build the product was a small component that could be purchased for $$60$ in the marketplace, including quantity discounts.

Accordingly, management budgeted $$650,000$ for the purchasing and handling of $10,000$ components plus scrap.