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e. Make or Buy Eggers Company needs 40,000 units of a part to use in producing one of its products. If Eggers buys the part
e. Make or Buy Eggers Company needs 40,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $105 instead of making it, Eggers willnot use the released facilities in another manufacturing activity. Forty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost data are Cost to make the part Direct materials Direct labor Variable overhead Fixed overhead $43 23 31 10 $107 Required: Determine which alternative is more attractive to Eggers and by what amount. Alternative Saving
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