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Sheridan Industries incurs unit costs of $7 ( $4 variable and $3 fixed) in making...

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Accounting

Sheridan Industries incurs unit costs of $7 ( $4 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 16,400 of the assembly part at $6 per unit. If the offer is accepted, Sheridan will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, that Sheridan will realize by buying the part.

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