Question: Anderson Co. makes and uses 5,000 components each year in its manufacturing operations. An outside supplier has offered to supply the components to Anderson at

Anderson Co. makes and uses 5,000 components each year in its manufacturing operations. An outside supplier has offered to supply the components to Anderson at $66 per unit. Anderson's production costs are as follows: Direct materials $8, Direct labor $32, Variable overhead $12, and Fixed overhead (based on normal capacity) $34. If Anderson accepts the order, $8 of fixed overhead per unit will be eliminated.

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