Alpha CoCan Produce a Unit of Beta for the Following Costs

question 91

Multiple Choice

Alpha Co.can produce a unit of Beta for the following costs:
$\begin{array}{l}\text { Direct material } & \$8 \\\text { Direct labor } & 24 \\\text { Overhead } &\underline { 40} \\\text { Total costs per unit } & \underline { \$72}\end{array}$

An outside supplier offers to provide Alpha with all the Beta units it needs at $60 per unit.If Alpha buys from the supplier, Alpha will still incur 40% of its overhead.Alpha should:

• A)Buy Beta since the relevant cost to make it is $72.
• B)Make Beta since the relevant cost to make it is $56.
• C)Buy Beta since the relevant cost to make it is $48.
• D)Make Beta since the relevant cost to make it is $48.
• E)Buy Beta since the relevant cost to make it is $56.

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Definitions:

Modules

Independent or separable components of a system or product that can operate on their own or be combined with other modules for added functionality.

Manufacturing Processes

Methods andtechniques used to transform raw materials and components into finished goods.

Value-Stream Mapping

A lean management tool for analyzing the current state and designing a future state for the series of events that take a product or service from its beginning through to the customer.

Process Mapping

A visual representation of the sequence of actions or steps involved in the production or service process, used to analyze and improve efficiency.