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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?
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