TB MC Qu. 10-50 Factor Co. can produce a unit of product...

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

Direct material	$	7.10
Direct labor		23.10
Overhead		35.50
Total product cost per unit	$	65.70

An outside supplier offers to provide Factor with all the units it needs at $38.85 per unit. If Factor buys from the supplier, the company will still incur 70% of its overhead. Factor should choose to:

Multiple Choice:

a. Buy since the relevant cost to make it is $55.05.

b. Make since the relevant cost to make it is $40.85.

c. Buy since the relevant cost to make it is $40.85.

d. Make since the relevant cost to make it is $30.20.

e. Buy since the relevant cost to make it is $30.20.