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Question - Company A needs to know if they should buy a product for $50 or continue to make the product. They need 10650 units for a job- and they think 60% of Fixed overhead will continue regardless of which choice.
It currently costs the following to make the product: Direct material per unit is $5, Direct labor is $20, Variable overhead is $9, Fixed overhead is $12. They don't think they can use this facility for any other purpose in the future. How much cost can they avoid if they stop making it and start buying it?
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