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Olive Corp currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are:
Direct Materials 12
Direct Labor 8
Variable manufacturing overhead 12
Fixed manufacturing overhead 8
Problem 1: An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a P36 per unit price. Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?
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