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Question(s) / Instruction(s):

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

Fixed overhead (based on normal capacity)         34

If Anderson accepts the order, $8 of fixed overhead per unit will be eliminated.

What is the relevant cost to produce one unit?

a)            $86

b)            $52

c)            $78

d)            $60

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