Question
Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $20 each. The company is considering
Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $20 each. The company is considering making the switches internally at the following projected annual production costs: 3 2 Unit-level material cost Unit-level labor cost Unit-level overhead Batch-level set -up cost (5,000 units per batch) Product-level supervisory salaries Allocated facility -level costs $ 1 $ 25,000 $ 37,500 $20,000 The company expects an annual need for 5,000 switches. If the If the company makes the product, it will have to utilize factory space currently being leased to another company for $1,500 a month. If the company decides to make the parts, total costs will be:
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