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Ivanhoe Industries manufactures 79000 digital cameras each year. Ivanhoe has been producing the lenses internally. However, late last year the company received an offer to
Ivanhoe Industries manufactures 79000 digital cameras each year. Ivanhoe has been producing the lenses internally. However, late last year the company received an offer to produce the 154000 lenses the company uses each year for a total contract price of $384000. When Ivanhoe manufactures the lenses internally, direct materials cost $1.05 per lens, direct labor is $0.65 per lens, and variable overhead is $0.30 per lens. Ivanhoe's total overhead is $114000. If the lens were purchased, $32000 of fixed overhead could be avoided. What is the total relevant cost to produce the lenses internally? $340000$422000$384000$390000
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