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P5H Company makes 2,000 units of pipes for use in one of its products. Data concerning the unit production costs of the pipe as follows:

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P5H Company makes 2,000 units of pipes for use in one of its products. Data concerning the unit production costs of the pipe as follows: Direct materiais $10 Direct labor 8 Variable manufacturing overhead Fxed manufocturing overhead, traceable Fixed manufocturing overheod, common. but allocated =10 Total manufocturing cost per unit $37 is depreciotion of speciat equipment that has no resale value. Aswume also that PSH Compary could use the facilities presenty devoted to peoduction of the pipes to iers co aceminei company thot would yiold an additional income of 525.000 annualiy. Q) Calculate the net effect if PSH Company accept the offer? Should the company accept the offer? (1) Total purchase price: (2) Avoidable cost: (3) Opportunity cost: (4) Net effect: (5) Decision

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