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Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this? part, assuming a

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this? part, assuming a production level of? 6,300 units, are as? follows:

Direct materials

?$4.10

Direct labor

?$4.40

Variable manufacturing overhead

?$3.30

Fixed manufacturing overhead

?$1.20

Total cost

?$13.00

The fixed overhead costs are unavoidable.

Assume Cruise Company can purchase? 6,300 units of the part from Suri Company for? $14.30 each, and the facilities currently used to make the part could be used to manufacture? 6,300 units of another product that would have an? $9 per unit contribution margin. If no additional fixed costs would be?incurred, what should Cruise Company? do?

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