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Golden Ticket Industries manufactures 10,000 units of part C-1 each year for use in its manufacturing operations. At this activity level, the cost to
Golden Ticket Industries manufactures 10,000 units of part C-1 each year for use in its manufacturing operations. At this activity level, the cost to manufacture C-1 on a per unit basis is as follows: Variable manufacturing cost per unit $27 Fixed manufacturing cost per unit $3 A supplier has offered to sell Golden Ticket 10,000 units of C-1 for $25 per unit. If the company purchases the part from the supplier, 50% of its total fixed costs will be eliminated. If the company purchases the part, the factory will sit idle (i.e., there is no alternative use for it). Compute the amount of cost savings that Golden Ticket will realize if it accepts the outside supplier's offer.
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