Benitez Company Currently Outsources a Relay Switch That Is a Component

question 76

Multiple Choice

Benitez Company currently outsources a relay switch that is a component in one of its products.The switches cost $20 each.The company is considering making the switches internally at the following projected annual production costs: $\begin{array}{ll}\text { Unit-level material cost } & \$3 \\\text { Unit-level labor cost } & \$2 \\\text { Unit-level overhead } & \$1 \\\text { Batch-level set-up cost (5,000 units per batch) } & \$ 25,000 \\\text { Product-level supervisory salaries } & \$ 37,500 \\\text { Allocated facility-level costs } & \$ 20,000\end{array}$ The company expects an annual need for 5,000 switches.If the company makes the product,it will have to utilize factory space currently being leased to another company for $1,500 a month.If the company decides to make the parts,total costs will be:

• A) $10,500 more than if the switches are purchased.
• B) $27,000 less than if the switches are purchased.
• C) $20,000 less than if the switches are purchased.
• D) $30,500 more than if the switches are purchased.

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Definitions:

Double-Blind Procedure

A study or experiment design in which both the participants and the experimenters do not know who is receiving a particular treatment, to prevent bias.

Placebo Control Procedure

A method used in research where a group of participants receives a sham treatment, allowing for comparison with a group receiving the actual treatment to determine its effect.

Stereotaxic Procedure

A surgical technique that allows precise positioning of instruments or lesions within the brain using a three-dimensional coordinate system.

Single-Blind Procedure

A research experiment in which only the participants do not know which group (control or experimental) they belong to.