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Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Cost Items Appearing on the Income Statement Materials

Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year:

Cost Items Appearing on the Income Statement
Materials cost ($10 per unit) Depreciation on manufacturing equipment
Company president's salary Salaries of administrative personnel
Labor cost ($4 per unit) Research and development costs
Advertising costs (150,000 per year) Real estate taxes on factory
Shipping and handling ($500 per year) Inspection costs

Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston, which of the following costs would be relevant to the outsourcing decision?

Multiple Choice

  • Materials cost
  • Labor cost
  • Inspection costs
  • All of these choices are correct.

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