The Role of Accounting Data:

Beldive Ltd. has formulated the following profit function:

where R and 5 are products and the $20,000 is the fixed costs for the company. Production is limited by capacity in the quality control section. The constraint for that section is formulated as:

At present, each quality control unit as represented by the 2,500-unit constraint has a cost of $4. A subcontractor has offered to perform additional quality control services at a cost of $7 per quality control unit.

Required:

Should the company utilize the services of the subcontractor? Show supporting calculations.

Transcribed Image Text:

Profit $12R+$195 - $20.000