The involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales, and after-sales service is called O horizontal integration opportunity cost O relevant cost O vertical integration Knowledge Check 02 Newport Company produces 20,000 units of one of the parts used to produce one of its products at a cost of $23 per unit. A detailed breakdown of the cost is below. Direct materials, direct labor, variable overhead Depreciation of special equipment (no salvage value and no other use) Salary of supervisor (who will not be retained if the company stops making the parts) Allocated general overhead Total cost $200,000 $240,000 $320,000 $400,000 Per Unit 20,000 Units $ 10 4 -- 2 7 $ 23 $ 200,000 80,000 A supplier has offered to supply the 20,000 units for $20 per unit for a total cost of $400,000. What is the total relevant cost of producing the units internally?

Answer rating: 100% (QA)

The total relevant cost of producing the units internally is 320000 Heres why Relevant Costs We only consider costs that would be avoided if the compa... View the full answer