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Golden Company makes 3,000 units per year of a part called a glup for use in one of its products. Data concerning the unit production
Golden Company makes 3,000 units per year of a part called a glup for use in one of its products. Data concerning the unit production costs of glup follow: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Total Manufacturing Cost per Unit $35 $10 $ 8 $20 $73 An outside supplier has offered to sell Golden Company all the glups it requires. If Golden decided to discontinue making the glups, 40% of the above fixed manufacturing overhead costs could be avoided. Assume that direct labor is a variable cost. REQUIRED: 1. Assume Golden Company has no alternative use for the facilities presently devoted to production of the glups. If the outside supplier offers to sell glups for $65 each, should Golden Company accept the offer? Should the center be closed? Show calculations to support your
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