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What is the cost or benefit of purchasing the component

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Reference no: EM132691799

Problem 1: Sunny Enterprises makes a component that is used in the assembly of radios, the company's main product. For the component, the variable costs per unit are $18. Razor Edge Products wants to sell Sunny 10,000 units of the component for $22 per unit. Sunny will be able to avoid $30,000 in fixed overhead costs if it chooses to purchase the component externally. What is the cost or benefit of purchasing the component from Razor Edge?

Select one:

a. $70,000 cost
b. $40,000 cost
c. $10,000 cost
d. $10,000 benefit

Reference no: EM132691799

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