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Exercise 8-10 Every year Riverbed Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231
Exercise 8-10 Every year Riverbed Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: $ 5 11 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 10 Total $32 Flintrock, Inc., has offered to sell 7,300 units of part 231 to Riverbed for $34 per unit. If Riverbed accepts Flintrock's offer, its freed-up facilities could be used to earn $10,500 in contribution margin by manufacturing part 240. In addition, Riverbed would eliminate 40% 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 Riverbed accept Flintrock's offer
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