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Prepare an analysis showing the total cost savings

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Question - Emil Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 10,000 of the parts for $5.40 per unit. If it accepts the offer, Emil will save all variable costs and $1 of fixed costs.

Required - Prepare an analysis showing the total cost savings, if any, that Emil will realize by buying the part.

Reference no: EM133036396

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