Exercise 6-13 Outsourcing decision affected by opportunity costs Baxter Doors Company currently produces the doorknobs for the doors it makes and sells. The monthly cost of producing 5,000 doorknobs is as follows. Wells Company has offered to sell comparable doorknobs to Baxter for $15.20 each. Required a. Should Baxter continue to make the doorknobs? Support your answer with appropriate computations. b. For $24,000 per month, Baxter could lease the manufacturing space to another company. Would this potential cash inflow affect your response to Requirement a ? Explain
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