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Carmine Company uses 4.000 units of a product each year. The cost of manufacturing one unit at this volume is as follows: Direct materials Direct
Carmine Company uses 4.000 units of a product each year. The cost of manufacturing one unit at this volume is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total $10.00 14.00 5.00 4.00 $33.00 An outside supplier has offered to sell Carmine Company unlimited quantities at a unit cost of $30.00. If Carmine Company accepts this offer, it can eliminate 50% of the fixed costs assigned to the product. Furthermore, the space devoted to the manufacture of the product would be rented to another company for $15,000 per year. If Carmine Company accepts the offer of the outside supplier, annual profits will a. increase by $16,000. Ob. increase by $20,000. Oc. decrease by $16,000. Od. increase by $22,000
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