12-21 Relevant costing in make-or-buy decisions. Graham Douglas is a guard dog training business based in Coventry, the United Kingdom. The business trains and sells different breeds of guard dogs. The dogs are usually purchased from local dog breeders for $250 each. The cost of feeding each dog and providing veterinary treatments is $520. The dogs are usually trained for 12 months before being sold. The business employs a dog trainer and two dog walkers who are paid total of f1,850 per dog. The company occupies a 124 sq. meter estate and pays an annual rent of $15,000. Other bills such as water, gas, and electricity amount to f2,000 per annum but 50% of these are variable. The business also pays annual council tax of f1,200 for its business operation. There are no other expenses associated with the business. The cost per trained guard dog is summarized as: Purchase of dog 250 Feeding and veterinary treatments 520 Wages 1,850 Fixed overheads: Rent 15,000 Council tax 1,200 Water, gas and electricity 2,000 Total cost 20,820 The business has recently received an order from the London Charity for the Blind Trust for the supply of 60 trained Germany shepherd breed of guard dogs. The charity plans to distribute these to its members at the next Christmas. Graham Douglas is negotiating with Billy Jack, a reputable guard dog trainer in Germany to buy the 60 trained guard dogs at $5,000 each