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Every year Indigo Industries manufactures 6,700 units of part 231 for use in its production cycle. The per unit costs of part 231 are as

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Every year Indigo Industries manufactures 6,700 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: $4 12 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total 5 10 $31 Flintrock, Inc., has offered to sell 6,700 units of part 231 to Indigo for $34 per unit. If Indigo accepts Flintrock's offer, its freed-up facilities could be used to earn $10,900 in contribution margin by manufacturing part 240. In addition, Indigo would eliminate 50% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy $ (b) Should Indigo accept Flintrock's offer? Toutbooland Modis

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