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Part T7800 is used in one of Dooley Corporation's products. The company makes 5,000 units of this part each year. The company's Accounting Department reports
Part T7800 is used in one of Dooley Corporation's products. The company makes 5,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Direct materials $1.00 per unit Direct labor $2.00 per unit $6.00 per unit Variable mfg overhead Supervisor's salary $3.00 per unit Depreciation of special equipment $9.00 per unit Allocated general overhead $4.00 per unit An outside supplier has offered to produce this part and sell it to the company for $14.00 each. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The supervisor is only responsible for producing part T7800. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $1 per unit of these allocated general overhead costs would be avoided. What is the maximum price that Dooley Corporation would be willing to pay an outside supplier for part T7800? $4.00 per part $13.00 per part $12.00 per part $9.00 per part
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