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company A currently manufactures a subassembly for its main product. The costs per unit are as follows : direct materials$54 direct labor35 variable overhead40 fixed

company A currently manufactures a subassembly for its main product. The costs per unit are as follows :

direct materials$54

direct labor35

variable overhead40

fixed overhead34

total163

company b has contracted company a with an offer to manufacture and then sell 6000 of the subassemblies for $114 each to company a. company a will eliminate $89000 of fixed overhead if it accepts the proposal. Should company a make or buy the subassemblies? What is the diference between the two alternatives?

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