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Kareem company uses part F51 in one of its products. The company's Accounting Department reports the following costs of producing one 1 unit of the
Kareem company uses part F51 in one of its products. The company's Accounting Department reports the following costs of producing one 1 unit of the part E51 that is needed to manufacture its products. UP Per Unit $10 Direct materials 55 Direct labor Variable manufacturing overhead$3 Fixed manufacturing overhead $5 Total manufacturing cost per unit$ 23 An outside supplier has offered to make the part and sell it to the company for $19 each. If this offer is accepted, 30% of the above fixed manufacturing overhead costs could be avoided. Moreover, all of the variable costs, including direct materials, direct labor, and variable manufacturing overhead, can be avoided. Instructions 1. Prepare a report that shows the financial impact of buying part Q89 from the supplier rather than continuing to make it inside the company. (6 marks) 2. Which alternative should the company choose? Justify your answer (2+2=4 marks) B 1 E 81 Paragraph - 40 & V 6 % 4 + T #
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