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Company A makes tennis shoes. The costs to produce a pair of shoes are: $5.00 direct labor cost; $8.00 direct material cost and $12.00

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Company A makes tennis shoes. The costs to produce a pair of shoes are: $5.00 direct labor cost; $8.00 direct material cost and $12.00 manufacturing overhead cost (of which $8.00 is fixed manufacturing overhead and $4.00 is variable manufacturing overhead). Company A is considering outsourcing the production of the tennis shoes to an overseas operation. Assuming the fixed overhead cost could not be eliminated, at what price would it be economically beneficial for Company A to outsource production. (All prices include shipping to the US) A) $20 B) $16 C) $18 D) $14

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