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Help Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing
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Cotton Corp.currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Per unit $33.00 13.50 20.00 26.50 $93.00 An outside supplier has offered to provide Cotton Corp. with the 10,000 subcomponents at an $85.00 per unit price. Fixed overhead is not avoidable. If Cotton Corp. rejects the outside offer, what will be the effect on short-term profits? Multiple Choice $80,000 increase $265,000 increase $185.000 decrease no changeStep by Step Solution
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