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Gertrude Corp. is in the business of producing high quality ascots for its fancy clients. Gertrude makes the ascots from fabric that it spins and
Gertrude Corp. is in the business of producing high quality ascots for its fancy clients. Gertrude makes the ascots from fabric that it spins and weaves itself. The costs for this are $1 per yard in variable costs per unit and $112,000 in fixed costs. Gertrude has an opportunity to purchase the fabric for $1.41 per yard from a supplier. If 145,000 yards of fabric are required, how much will Gertrude save by selecting the cheaper option? Hint: Solve the Make or Buy Decision, then determine how much cheaper the better option is.
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