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U-RIDE, Inc. currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the
U-RIDE, Inc. currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $235 each. Current production information follows: Unit-level material and labor Facility-level depreciation of manufacturing equip. Product-level engine production supervisor's salary Annual facility-level utilities $ 200 $ 5,500/month $ 2,500/month $17,500 Buying the engines will free up manufacturing capacity that could be used to make a new economy line golf cart that would produce an additional $65,000 profit per year. U-RIDE is currently operating profitably producing and selling 2,500 engines annually. Based on this information, which of the following is true? Multiple Choice The $65,000 is not relevant because it is an estimate. Buying the units would increase U-RIDE's cost by S23 per unit. U-RIDE has avoidable costs of less than $235 per unit and should therefore buy engines. O The cost of buying the engines is $3 per unit less than the relevant cost of making the units
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