Question: Area Assume that Excellent Inc. has been purchasing a component necessary for its final product for $290 a unit. The factory is currently operating at

Area Assume that Excellent Inc. has been purchasing a component necessary for its final product for $290 a unit. The factory is currently operating at 80% capacity, and no major increase in production is expected in the near future. The cost per unit of manufacturing the component internally is estimated as follows: Direct materials $ 60 Direct labor 84 Variable factory overhead 60 Fixed factory overhead 56 Total cost per unit $204.

Calculate the cost savings from manufacturing the component internally.

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