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What is the differential cost to produce product D

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Reference no: EM132861472

Question -

A. Beta Inc. can produce a unit of Zed for the following costs:

Direct material $10

Direct labor 20

Overhead 50

Total costs per unit $80

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 $30.

D. Buy Zed since the relevant cost to make it is $80.

B. Cart Co. can further process Product J to produce Product D. Product J sells for $20.00 per pound and costs $15.75 per pound to produce. Product D sells for $38.00 per pound, but requires an additional cost of $8.55 per pound to produce. What is the differential cost to produce product D?

A. $6.50

B. $17.00

C. $15.75

D. $8.55

C. Each of the following considerations are qualitative considerations in make or buy decisions except:

A. Perception of potential customers

B. Effects of the decision on the local economy

C. Increase in market share

D. Cost savings

Reference no: EM132861472

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