Answer Happy

Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $21 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 (6,000 units per batch) Product-level supervisory salaries Allocated facility-level costs $ 4 $ 3 $ 2 $26,000 $38,000 $21,000 The company expects an annual need for 6,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $1600 a month. If the company decides to make the parts, total costs will be