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Buddy Pets has recently started to manufacture talking toy pets. The cont structure to manufacture 10,000 of these toy pets is as follows: Direct materials
Buddy Pets has recently started to manufacture talking toy pets. The cont structure to manufacture 10,000 of these toy pets is as follows: Direct materials ($20 per pel $300,000 250,000 Direct labour ($25 perpet) Variable owerhead ($8 perpet) 80.000 Allocated food overhead ($20 per pet) 200,000 Total $830,000 Buddy Pets is approached by Maxum inc, which offers to make the toy pets for $73 per unit Using incremental analysis, determine whether Buddy Pets should accept this offer under each of the following independent assumptions: Prepare an incremental analysis. Assume that $90,000 of the food overhead cost in making 10,000 of the toy pets) is avoidable. (Enter savings with a negative preceding the number15.000 or parenthesis, 8 (15.000) Buy Cost (Saving Cost Make Total annual cost Prepare an incremental analysis. Assume that none of the fored overhead is avoidable. However, if the pets are purchased from Maxum, Buddy Pets can use the released productive resources to generate additional income of $150,000. (Enter savings with a negative sko preceding the number es. -15,000 or parenthesis, 6.3 (15,0001) Cost Make Buy Cost (Saving) Total annual cost Opportunity cost Total cost Should Buddy Pets continue to make the pets or buy the pets Buddy Pets should the pets
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