ACCOUNTING
Multiple Choice
Melodee’s Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:
Direct materials $0.25
Direct labor 0.03
Unit-related support costs 0.10
Batch-related support costs 0.12
Product-sustaining support costs 0.22
Facility-sustaining support costs 0.28
Total cost per jar $1.00
The relevant cost per jar is
a. $0.28 per jar.
b. $0.38 per jar.
c. $0.72 per jar.
d. $1.00 per jar.
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