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Archer currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price
Archer currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $42. Archer currently produces 100,000 subcomponents at the following manufacturing costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit cost Per unit $ 15.00 9.00 10.00 15.00 $ 49.00 a. If Archer has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier? Hint: Calculate difference between making all units and buying all units
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