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Calculate the cost savings from manufacturing

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Reference no: EM132541087

Assume that Synergy Inc. has been purchasing a component necessary for its final product for $220 a unit. The factory is currently operating at 80% of 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 $ 70

Direct labor 70

Variable factory overhead 42

Fixed factory overhead 56

Total cost per unit $238

Question 1: Calculate the cost savings from manufacturing the component internally.

Reference no: EM132541087

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