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Sheridan Company must decided whether to make or buy some of its components. The costs of producing 62600 switches for its generators are as follows.
Sheridan Company must decided whether to make or buy some of its components. The costs of producing 62600 switches for its generators are as follows. Instead of making the switches at an average cost of $2.94 ($184044/62600), the company has a opportunity to buy the switches at $2.73 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. Prepare a incremental analysis showing whether the company should make or buy the switches. Would you answer be different if the released productive capacity will generate additional income of $49014
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