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Blubyu Ltd manufactures Blu ray players and has always produced in-house all necessary parts for them, including casings. The cost per unit of the casings at a production level of 80,000 units is as follows;
Direct Labour $6.00Direct Materials 3.00Variable factory overhead 18.00Fixed factory overhead 6.00Total Unit Cost $33.00
Required
Problem 1: Should the offer be accepted if there are no alternatives uses for the manufacturing capacity currently being used to produce the casings? Why?
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