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Van Gogh Company currently outsources a relay switch that is a component in one of its products. The switches cost $30 each. The company is
Van Gogh Company currently outsources a relay switch that is a component in one of its products. The switches cost $30 each. The company is considering making the switches internally at the following projected annual production costs: Unit-level material cost $ 6 Unit-level labor cost 5 Unit-level overhead $ 4 $38,000 Batch-level set-up cost (7,000 units per batch) Product-level supervisory salaries $44,000 $33,000 Allocated facility-level costs The company expects an annual need for 7,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $2,800 a month. If the company decides to make the parts, total costs will be: Multiple Choice O $10,600 more than if the switches are purchased. O $43.600 more than if the switches are purchased. $33,400 less than if the switches are purchased. $33,000 less than if the switches are purchased. $
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