Beta Inc Can Produce a Unit of Zed for the Following

question 99

Multiple Choice

Beta Inc. can produce a unit of Zed for the following costs: $$\begin{array} { | l | r | } \hline \text { Direct material } & \$ 10 \\\hline \text { Direct labor } & 20 \\\hline \text { Overhead } & 50 \\\hline \text { Total costsper unit } & \$ 80 \\\hline\end{array}$$ An outside supplier offers to provide Beta with all the Zed units it needs at $58 per unit. If Beta buys from the supplier, it will still incur 40% of its overhead. Beta should:

• A) Buy Zed since the relevant cost to make it is $60.
• B) Make Zed since the relevant cost to make it is $60.
• C) Buy Zed since the relevant cost to make it is $80.
• D) Make Zed since the relevant cost to make it is $30.
• E) Buy Zed since the relevant cost to make it is $30.

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Definitions:

Pension Asset/Liability

Represents the surplus or deficit in a company's pension plan, indicating whether assets are sufficient to cover pension obligations.

Funded Status

The financial status of a pension plan, usually indicating the extent to which assets cover liabilities.

Past Service Cost

The cost of additional retirement benefits awarded for an employee's service in prior periods, typically arising from plan amendments.

Service Cost

The portion of the projected pension benefit that is attributed to employee's service in the current year, often used in accounting for pension expenses.