Question
Epsilon Co. can produce a unit of product for the following costs: Direct material $7.40 Direct labor 23.40 Overhead 37.00 Total costs per unit $67.80
Epsilon Co. can produce a unit of product for the following costs:
Direct material $7.40 Direct labor 23.40 Overhead 37.00 Total costs per unit $67.80
An outside supplier offers to provide Epsilon with all the units it needs at $60.70 per unit. If Epsilon buys from the supplier, the company will still incur 30% of its overhead. Epsilon should choose to:
Multiple Choice -
Buy since the relevant cost to make it is $41.90.
-
Buy since the relevant cost to make it is $56.70.
-
Make since the relevant cost to make it is $41.90.
-
Buy since the relevant cost to make it is $67.80.
-
Make since the relevant cost to make it is $56.70.
Epsilon Co. can produce a unit of product for the following costs:
| Direct material | $7.40 |
| Direct labor | 23.40 |
| Overhead | 37.00 |
| Total costs per unit | $67.80 |
An outside supplier offers to provide Epsilon with all the units it needs at $60.70 per unit. If Epsilon buys from the supplier, the company will still incur 30% of its overhead. Epsilon should choose to: |
Buy since the relevant cost to make it is $41.90.
Buy since the relevant cost to make it is $56.70.
Make since the relevant cost to make it is $41.90.
Buy since the relevant cost to make it is $67.80.
Make since the relevant cost to make it is $56.70.
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Intermediate Accounting
Authors: David Spiceland
11th Edition
9781264134526
