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Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another
Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another company to supply them ready make at $5 each. The details of Company A internal production costs are as follows: Direct material/unit $2.00 Direct labor/unit $3.00 Variable production overhead $0.50 Fixed production overhead $0.50 Total production per unit cost $6.00 The company also need to pay for transport charges of $5,000 for the delivery of 3,000 units of the product Calculate the relevant cost of buying the product Oa. $15,000 O b. $35,000 Oc$30,000 Od. $20,000
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