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Golden Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as shown. It is estimated
Golden Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as shown. It is estimated that 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Golden Engine Company has the option of purchasing the part from an outside supplier at $85 per unit. If Golden Engine Company accepts the offer from the outside supplier, what is the monthly avoidable costs (costs that will no longer be incurred)? A. $92,000 B. $80,000 C. $100,000 D. $50,000 E. $98,000
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