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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
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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