Beta IncCan Produce a Unit of Zed for the Following Costs

question 56

Multiple Choice

Beta Inc.can produce a unit of Zed for the following costs:
$\begin{array}{l}\text { Direct material } & \$10 \\\text { Direct labor } & 20 \\\text { Overhead } &\underline { 50} \\\text { Total costs per unit } & \underline { \$80}\end{array}$
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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