Answer Happy

Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $36 each. The company is considering making the switches internally at the following projected annual production costs: Unit-level material cost Unit-level labor cost Unit-level overhead Batch-level set-up cost (5,000 units per batch) Product-level supervisory salaries Allocated facility-level costs $ $ $ 6 5 4 $41,000 $45,500 $36,000 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 $3,100 a month. If the company decides to make the parts, total costs will be:

Multiple Choice $18,700 more than if the switches are purchased. O $54,700 more than if the switches are purchased, $26.800 less than if the switches are purchased. $36,000 less than if the switches are purchased.