What are the relevant costs for Ruby

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Question - Ruby Co. currently manufactures a subassembly for its main product. The costs per unit are as follows:

Direct materials P450

Direct labor 350

Variable overhead 330

Fixed overhead 300

Total P1,430

Gem Inc. has contacted Ruby with an offer to sell 5,000 of the subassemblies for P1,350 each. Ruby will eliminate P850,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Ruby?

Reference no: EM133014514

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