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Hi. Please help me solve this question Raobhut labs can sell both CDs and Speakers to its customer, MaMoMo Studios but can only produce EITHER
Hi. Please help me solve this question
Raobhut labs can sell both CDs and Speakers to its customer, MaMoMo Studios but can only produce EITHER CDs or Speakers. It can produce 20,000 speakers with the following costs: Direct materials Direct labor Variable overhead Fixed Overhead (purchasing, receiving, and set-ups) Fixed Overhead Rs 32 per unit Rs 4 per unit Rs 16 per unit Rs 8 per unit Rs 12 per unit Raobhut also has the option of buying speakers from Disabled Hen at Rs 64 each. If Raobhut makes the CDS, it can make 10,000 CDs to sell to MaMoMo Studios. The CDs would be sold for Rs 64 each and have the following cost of production. Direct Materials Direct labor Variable overhead Rs 24 per unit Rs 4 per unit Rs 16 per unit A) Which of the two products, CDs or Speakers should Raobhut produce? B) What is Raobhut opportunity cost if the decision is made to produce speakers? 10 marks eachStep by Step Solution
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