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Question - W Company can make 1,000 toy robots with the following costs:
Direct materials $70,000
Direct labor 26,000
Variable overhead 15,000
Fixed overhead 15,000
The company can purchase the 1,000 robots externally for $125,000. The avoidable fixed costs are $5,000 if the units are purchased externally.
What is the cost savings if the company makes the robots?
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