Solution-What will be the effect on short-term profits

What will be the effect on short-term profits

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Reference no: EM132766270

Question - 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

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. If Olive Corp rejects the outside offer, what will be the effect on short-term profits?

Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?

Reference no: EM132766270

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What will be the effect on short-term profits

Reference no: EM132766270

Reference no: EM132766270

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