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(The following information applies to the questions displayed below.) Each of the following situations is independent: Part a (Algo) Make or Buy Terry Incorporated manufactures
(The following information applies to the questions displayed below.) Each of the following situations is independent: Part a (Algo) Make or Buy Terry Incorporated manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,350 units of product OP89 for $190,350. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Direct materials Direct labor Variable overhead Allocated fixed overhead Cost per Unit $ 35 25 23 4 Required: 1. What is the relevant cost per unit to make the product internally? 2. What is the estimated increase or decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier? What is the relevant cost per unit to make the product internally? Relevant Cost Per Unit Direct labor Direct materials Variable overhead Allocated fixed overhead Total relevant cost $ 0 What is the estimated increase or decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier
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