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Neon company makes printers. Currently, Neon is producing the glass plates for the printers in their only production facility. Neon incurs $12 in direct
Neon company makes printers. Currently, Neon is producing the glass plates for the printers in their only production facility. Neon incurs $12 in direct material cost, $8 in direct labor cost and $1.50 in variable (incremental) overhead cost to make the glass plates. An outside supplier has offered to provide Neon with the glass surfaces for their printers for $21.00 each. Required: a. Prepare a quantitative analysis for this decision. Based on your analysis, should Neon continue to make the glass plates or buy them from the supplier? b. If fixed overhead cost information for Neon's production facility were provided, would it be relevant for this decision? Why or why not? c. Explain one qualitative factor that Neon should consider when making this decision.
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