Laco Company Acquired Its Factory Building About 20 Years Ago

question 57

Essay

Laco Company acquired its factory building about 20 years ago. For a number of years the company has rented out a small, unused part of the building. The renter's lease will expire soon. Rather than renewing the lease, Laco Company is considering using the space itself to manufacture a new product. Under this option, the unused space will continue to be depreciated on a straight-line basis, as in past years.
Direct materials and direct labor cost for the new product would be $50 per unit. In order to have a place to store finished units of the new product, the company would have to rent a small warehouse nearby. The rental cost would be $2,000 per month. It would cost the company an additional $4,000 each month to advertise the new product. A new production supervisor would be hired to oversee production of the new product who would be paid $3,000 per month. The company would pay a sales commission of $10 for each unit of product that is sold.
Required:
Complete the chart below by placing an "X" under each column heading that helps to identify the costs listed to the left. There can be "X's" placed under more than one heading for a single cost. For example, a cost might be a product cost, an opportunity cost, and a sunk cost; there would be an "X" placed under each of these headings on the answer sheet opposite the cost. *Between the alternatives of (1) renting the space out again or (2) using the space to produce the new product.

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Definitions:

Supportive Therapy

A therapeutic approach focusing on reinforcing a person's existing coping mechanisms and providing emotional support, often used in managing stress, anxiety, and depressive symptoms.

Psychological Mindedness

Psychological mindedness refers to an individual's capacity to recognize and reflect upon the psychological states and processes in themselves and others, often influencing their responsiveness to psychotherapy.

Intrapsychic Conflicts

Internal struggles often stemming from competing desires, emotions, or beliefs within one's own mind.

Meta-analyses

A statistical method that combines the results of multiple scientific studies to arrive at a comprehensive conclusion about a particular research question or topic.