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Problem
Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:
Direct materials $ 45.00Direct labor 35.00Variable overhead 33.00Fixed overhead 20.00Total $133.00
Crayola Technologies Inc. has contacted Rubium with an offer to sell 5,000 of the subassemblies for $135.00 each. Rubium will eliminate $65,000 of fixed overhead if it accepts the proposal.
What are the relevant costs for Rubium?
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