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Lunar, Inc. produces several types of hoses. An outside supplier has offered to produce the commercial hose for Lunar for $640 each. Lunar needs 1,000 fountains annually. Lunar has provided the following unit costs for its commercial hoses:
Direct Materials $150
Direct labor 140
Variable overhead 100
Fixed overhead (30% avoidable) 200 >
Instructions Prepare an incremental analysis which shows the effect of the make-or-buy decision.
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