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Adams Company makes 150,000 units per year of a part used in its ice cream machine. An outside supplier offered to sell it to Adams
Adams Company makes 150,000 units per year of a part used in its ice cream machine. An outside supplier offered to sell it to Adams for $99.00. Currently, Adams has the following costs to manufacture it: Direct materials Direct labor Variable overhead Fixed overhead $36.10 38.00 2.50 34.20 Total costs $110.80 If the offer is accepted, all direct labor cost would be avoided. However, $15.90 of fixed overhead will continue even if the part is purchased from outside. How much of the unit product cost of $110.80 is relevant for decision making? O a. $94.90 O b. $76.60 O c. c. $110.80 O d. $59.13
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