P Company currently manufactures all component parts used in the manufacture of various small appliances....
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Accounting
P Company currently manufactures all component parts used in the manufacture of various small appliances. A steel handle is used in three different products. The current year budget for 20,000 handles has the following unit cost:
Direct material $0.60
Direct labor 0.40
Variable overhead 0.10
Fixed overhead 0.20
Total unit cost $1.30
A steel company has offered to supply 20,000 handles to P Company for $1.25 each, which includes delivery. Should the offer be accepted?
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