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Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit $ 12 Direct materials
Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit $ 12 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost 0000 40 An outside supplier has offered to provide Olive Corp. with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. If Olive Corp. accepts the outside offer, what will be the effect on short-term profits? $160,000 decrease $320,000 increase $160,000 increase $80,000 decrease
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