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Question 9 (4 points) The DEF Company produces a part that is used in the nal assembly of its main product. Typical monthly production is
Question 9 (4 points) The DEF Company produces a part that is used in the nal assembly of its main product. Typical monthly production is 140,000 units. The estimated costs at this volume level are as follows: Direct materials $490,000 Direct labor $315,000 Variable overhead $245,000 Fixed overhead $560,000 A supplier has offered to provide 140,000 parts per month at $10.00 per unit. The DEF Company would have to pay 'eight of $70,000 per month for the purchased parts. If the parts are purchased, 30% of the total xed overhead will be eliminated and the production space will be leased for rental income of $65,000 per month. What is the dollar amount that DEF company will save or (lose) if it accepts the supplier's offer? Make sure to tell me whether the dollar amount is a savings or a loss
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