(LO 8) Factor Co. can produce a unit of product for the following costs:

 

        Direct material $ 7.20   Direct labor   23.20   Overhead   36.00   Total costs per unit $ 66.40  

 

An outside supplier offers to provide Factor with all the units it needs at $42.80 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to:

Multiple Choice

• Buy since the relevant cost to make it is $52.00.
• Make since the relevant cost to make it is $44.80.
• Buy since the relevant cost to make it is $44.80.
• Make since the relevant cost to make it is $30.40.
• Buy since the relevant cost to make it is $30.40.