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Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $20, computed as follows: Direct materials
Supler Corporation produces a part used in the manufacture of one of its products. The unit product cost is $20, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $9 $20 An outside supplier has offered to provide he annual requirement o 3.400 o the parts for on y S 5 each. The company estimates at 6 % 0 he xed manufacturing overhead cost above cou d e minat f he parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be: Multiple Choice (S1) per unit on average S1 per unit on average 53 per unit on average $5) per unit on average
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