The Multiproducts Company currently purchases a component for $30 each. The company has excess capacity and is considering the possibility of making the component. The Cost Accounting Department estimates that the following costs would be incurred to make each unit of the component:
Additionally, if Multiproducts decides to make the component, additional foremen, custodial personnel, and material handlers are required at a total cost of $150 000 per year.

Question

The Multiproducts Company currently purchases a component for $30 each. The company has excess capacity and is considering the possibility of making the component. The Cost Accounting Department estimates that the following costs would be incurred to make each unit of the component:
  Additionally, if Multiproducts decides to make the component, additional foremen, custodial personnel, and material handlers are required at a total cost of $150 000 per year.

Quizplus · Accepted Answer

The Answer of The Multiproducts Company currently purchases a component for $30 each. The company has excess capacity and is considering the possibility of making the component. The Cost Accounting Department estimates that the following costs would be incurred to make each unit of the component:
  Additionally, if Multiproducts decides to make the component, additional foremen, custodial personnel, and material handlers are required at a total cost of $150 000 per year.

The Multiproducts Company Currently Purchases a Component for $30 Each