Epsilon Co. can produce a unit of product for the following costs: An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:
A) Buy since the relevant cost to make it is $72.
B) Make since the relevant cost to make it is $56.
C) Buy since the relevant cost to make it is $48.
D) Make since the relevant cost to make it is $48.
E) Buy since the relevant cost to make it is $56.

Question

Epsilon Co. can produce a unit of product for the following costs:  An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:
A) Buy since the relevant cost to make it is $72. 
B) Make since the relevant cost to make it is $56. 
C) Buy since the relevant cost to make it is $48. 
D) Make since the relevant cost to make it is $48. 
E) Buy since the relevant cost to make it is $56.

Quizplus · Accepted Answer

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