Home Safety Products currently outsources an electrical switch that is a compone

Question

Home Safety Products currently outsources an electrical switch that is a component in its sprinkler systems. The switches are purchased for $12 each. The company is considering making the switches internally and has conducted a study to determine what the cost would be. Below are projected annual costs: Unit-level costs $ 8 Batch-level costs per year $15,000 Product-level costs per year $10,000 Allocated facility-level costs $20,000 The company needs 10,000 of the switches each year. If Home Safety decides to make the parts under these conditions, the relevant cost per unit will be: (Points : 2) $8 $9.50 $10.50 $12.50

Explanation / Answer

The relevant cost would be those which will be incurred if production is carried out: 8 + (15000+10000)/10000 = 10.50 Alternative answers subsist if these costs are period specific & not product specific. Please consider the time devoted to make this reply by rating this as 5star. Thank u in advance. God bless u :)

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