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Benitez Company currently outsources a relay switch that is a component in one of its products. The switches cost $33 each. The company is considering making the switches internally at the following projected annual production costs:

Unit-level material cost	$	8
Unit-level labor cost	$	7
Unit-level overhead	$	6
Batch-level set-up cost (9,000 units per batch)	$	40,000
Product-level supervisory salaries	$	45,000
Allocated facility-level costs	$	35,000

The company expects an annual need for 9,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,000 a month. If the company decides to make the parts, total costs will be:

The company expects an annual need for 9,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $3,000 a month. If the company decides to make the parts, total costs will be:

Multiple Choice

$13,000 more than if the switches are purchased.

$48,000 more than if the switches are purchased.

$32,000 less than if the switches are purchased.

$35,000 less than if the switches are purchased.

Unit-levelmaterialcostUnit-levellaborcostUnit-leveloverheadBatch-levelset-upcost(9,000unitsperbatch)Product-levelsupervisorysalariesAllocatedfacility-levelcosts$$$$40,000$45,000$35,000876

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