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Manama Inc. is now producing TVs. The companys accounting department reports the following costs of...

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Accounting

Manama Inc. is now producing TVs. The companys accounting department reports the following costs of producing 100,000 units of the TVs each year:

Direct Materials $4

Direct Labor $2

Variable Overhead $2

Fixed cost $ 3.5

An outside supplier offered to sell 100,000 units to Manama Company at a price of only $10 each.

Required: Should the company stop producing the TVs internally or buy them from the outside supplier?

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