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Florida Snorkel Company makes snorkeling equipment. Assume that Hawaii Snorkel Company has offered to produce snorkeling masks for Florida Snorkel Company for $18 per mask.
Florida Snorkel Company makes snorkeling equipment. Assume that Hawaii Snorkel Company has offered to produce snorkeling masks for Florida Snorkel Company for $18 per mask. Florida Snorkel Company needs 100,000 masks per period. Florida Snorkel Company can only avoid $125,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Florida Snorkel Company currently has the following costs at a production level of 100,000 masks: Manufacturing Costs Direct Materials Direct Labor Variable MOH Fixed MOH Total Cost per Total Cost Mask $ 750,000 $ 7.50 80,000 0.80 520,000 5.20 650,000 6.50 $2,000,000 $20.00 * Florida Snorkel Company should
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