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Manson Industries

Price: $1.99

Manson Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making a
subassembly part for its fi nished product. A supplier offers to make 10,000 of the assembly
part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no
fixed costs.

Prepare an analysis showing the total cost saving, if any, Manson will realize
by buying the part.

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