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Relevant Cost Analysis for Outsourcing Decision : A company manufactures a component in-house at a variable cost of $20 per unit. The company receives a
Relevant Cost Analysis for Outsourcing Decision: A company manufactures a component in-house at a variable cost of $20 per unit. The company receives a bid from an external supplier to provide the component at $15 per unit. If the company decides to outsource, it can avoid fixed costs of $10,000 per month associated with in-house production. Determine whether the company should outsource the component based on relevant costs.
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