Epsilon Co. can produce a unit of product for the following costs:Direct material$ 8.60Direct labor24.60Overhead43.00Total product costs per unit$76.20An outside supplier offers to provide Epsilon with all the units it needs at $63.00 per unit. If Epsilon buys from the supplier, the company will still incur40% of its overhead. Epsilon should choose to:Multiple ChoiceMake since the relevant cost to make it is $50.40.Buy since the relevant cost to make it is $59.00.Buy since the relevant cost to make it is $50.40.Make since the relevant cost to make it is $59.00. An outside supplier offers to provide Epsilon with all the units it needs at $63.00 per unit. If Epsilon buys from the supplier, the company will still incur40% of its overhead. Epsilon should choose to:Multiple ChoiceMake since the relevant cost to make it is $50.40.Buy since the relevant cost to make it is $59.00.Buy since the relevant cost to make it is $50.40.Make since the relevant cost to make it is $59.00.Buy since the relevant cost to make it is $76.20.

The budget is prepared by the management on the basis of past experience. On the basis of the budget, It is helpful for the organization to get the variances and the gaps.Total making cost = Direct material + Direct labor + Overhead = 8.60 + 24.60 + ( 43 * 60% ) = 8.60 + 24.60 + 25.8 = 59 If Epsilon Company is buying product, then the relevant costs are $ 63 So, it's better to make the product The correct answer is Make since the relevant cost to make it is $ 59.00

Business

Accounting

Epsilon Co. can produce a unit of product for the following costs: Direct material $ 8.60 Direct labor 24.60 Overhead 43.00 Total product costs per unit $76.20 An outside supplier offers to provide Epsilon with all the units it needs at $63.00 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:

Epsilon Co. can produce a unit of product for the following costs: Direct material $ 8.60 Direct labor 24.60 Overhead 43.00 Total product costs per unit $76.20 An outside supplier offers to provide Epsilon with all the units it needs at $63.00 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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