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Clemente, Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials: $8 per unit Direct labor: $6 per unit Variable overhead:
Clemente, Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials: $8 per unit Direct labor: $6 per unit Variable overhead: $5 per unit Fixed overhead: $45,000 Clemente is approached by Stargell, an outside provider who offers to make 10,000 units of that subcomponent and sell the batch to Clemente for a total of $220,000. Clemente would still incur all of the fixed overhead even if Stargell manufactures the subcomponent. Which of the following is true? Clemente's cost increases if the buy the subcomponent from Stargell, so Clemente should continue to make the subcomponent. Clemente's cost remains the same whether they make the subcomponent or buy it from Stargell. Clemente's cost is less if they buy the subcomponent from Stargell, so Clemente should buy it from Stargell. Clemente's cost increases if the buy the subcomponent from Stargell, so Clemente should buy it from Stargell
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