Beta IncCan Produce a Unit of Zed for the Following Costs

question 49

Multiple Choice

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