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Manor, Inc. currently manufactures 1,500 subcomponents per month in one of its factories. The unit costs to produce the subcomponents are: Direct materials Direct labor

Manor, Inc. currently manufactures 1,500 subcomponents per month in one of its factories. The unit costs to produce the subcomponents are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Per unit $ 40 132 84 116 $372 Manor is considering purchasing the subcomponents from an outside supplier, who normally charges $400 per unit. The supplier also has an "Exclusive Buyer's Club" which costs $40,000 per month to join, but whose members can purchase the subcomponents for $350 per unit. Fixed overhead is not avoidable. If Manor chose to purchase the subcomponents using the cheaper of the two buying options, what would be the effect on profit? (Do not round intermediate calculations.) Multiple Choice Decrease $216,000 Decrease $181,000 Increase $35,000 Increase $648,000

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