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Factor Co. can produce a unit of product for the following costs: Direct material $ 8.10 Direct labor 24.10 Overhead 40.50 Total costs per unit

Factor Co. can produce a unit of product for the following costs:

Direct material $ 8.10
Direct labor 24.10
Overhead 40.50
Total costs per unit $ 72.70

An outside supplier offers to provide Factor with all the units it needs at $42.35 per unit. If Factor buys from the supplier, the company will still incur 70% of its overhead. Factor should choose to:

Multiple Choice

  • Buy since the relevant cost to make it is $60.55.

  • Make since the relevant cost to make it is $44.35.

  • Buy since the relevant cost to make it is $44.35.

  • Make since the relevant cost to make it is $32.20.

  • Buy since the relevant cost to make it is $32.20.

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