Question: Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the...

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Question: Howell Corporation produces an executive jet for whichit currently manufactures a fuel valve; the cost of the valve isindicated below: Cost per Unit Variable costs Direct material $960Direct labor 600 Variable overhead 300 Fixed costs Depreciation ofequipment 500 Depreciation of building 225 Supervisory salaries 300The company has an offer from Duvall Valves to produce the part for$2, 000 per unit and supply 1,000 valves (the number needed in thecoming year). If the company accepts this offer and shuts downproduction of valves, production workers and supervisors will bereassigned to other areas. The equipment cannot be used elsewherein the company, and it has no market value. However, the spaceoccupied by the production of the valve can be used by anotherproduction group that is currently leasing space for $55,000 peryear. What is the incremental savings of buying the valves? (theanswer should be stated in a per unit format and is a positivenumber)

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Question: Howell Corporation produces an executive jet for whichit currently manufactures a fuel valve; the cost of the valve isindicated below: Cost per Unit Variable costs Direct material $960Direct labor 600 Variable overhead 300 Fixed costs Depreciation ofequipment 500 Depreciation of building 225 Supervisory salaries 300The company has an offer from Duvall Valves to produce the part for$2, 000 per unit and supply 1,000 valves (the number needed in thecoming year). If the company accepts this offer and shuts downproduction of valves, production workers and supervisors will bereassigned to other areas. The equipment cannot be used elsewherein the company, and it has no market value. However, the spaceoccupied by the production of the valve can be used by anotherproduction group that is currently leasing space for $55,000 peryear. What is the incremental savings of buying the valves? (theanswer should be stated in a per unit format and is a positivenumber)