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Should Richard Company buy the flanges from other company

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Question - Richard Company makes flanges for its main product of widgets. The cost of making each widget is as follows:

Direct Materials: $3.60

Direct Labor: $10.00

Variable Manufacturing Overhead: $2.40

Fixed Manufacturing Overhead: $9.00

Total Cost Per Unit: $25.00

Another company has offered to sell to Richard Company the flanges for a price of $19.00 each. Should Richard Company buy the flanges from the other company or continue to make the flanges themselves?

Reference no: EM133076137

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