Business, 07.04.2020 02:54 Ivy2k

A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery so that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $80,000 per period. Depreciation is due to obsolescence rather than wear and tear.
1. Determine the total relevant cost per unit if starters are made inside the company.
2. Determine the total relevant cost per unit if starters are purchased.
3. What is the increase or decrease in profits as a results of purchasing the parts from the starters rather than making them inside the company? (Profit would by per period).

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