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Exercise 2) Easy Engine Company manufactures part LOVEACC3300 used in several of its engine models....

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Accounting

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Exercise 2) Easy Engine Company manufactures part LOVEACC3300 used in several of its engine models. Monthly production costs for 2,000 units are as follows: Direct Materials S46,000, Direct Labor $10,500, Variable Overhead S32,500, and Fixed Overhead $22,000. It is estimated that 22% of the fixed overhead costs assigned to LOVEACC3300 will no longer be incurred if the company purchases LOVEACC3300 from the outside supplier. Easy Engine Company has the option of purchasing the part from an outside supplier at $52.52 per unit. a) If the company accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total what amount? b) If the company accepts the offer, how much will they save or lose (in total) by accepting the offer from the outside supplier

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