Beta Inc. can produce a unit of Zed for the following costs: Direct material$10 Direct labor 20 Overhead 50 Total costs per unit$80 An outside supplier offers to provide Beta with all the Zed units it needs at $58 per unit. If Beta buys from the supplier, it will still incur 40% of its overhead. Beta should:Multiple ChoiceBuy Zed since the relevant cost to make it is $80.Make Zed since the relevant cost to make it is $30.Buy Zed since the relevant cost to make it is $60.Buy Zed since the relevant cost to make it is $30.Make Zed since the relevant cost to make it is $60.

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Parrain Parrain · Answer 1 · 2021-04-18T04:26:19+02:00

Answer: Buy Zed since the relevant cost to make it is $60.

Explanation:

Cost to produce Zed to Beta is $80.

If Beta buys Zed from a supplier, they will still incur 40% of their overhead which is:

= 40% * 50

= $20

Added to the cost of buying, total cost if Beta buys Zed would be:

= 58 + 20

= $78

This is less than the cost to produce so Beta should buy Zed from the supplier.

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