Olive Corp currently makes 20,000 subcomponents a year in one of its factories. The unit...
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Olive Corp currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are: Per unit $12 8 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost 12 8 $40 An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. If Olive Corp accepts the outside offer, what will be the effect on short-term profits? $160,000 decrease $160,000 increase $80,000 decrease $320,000 increase
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