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Sunland Company can produce 100 units of a component part with the following costs: Direct Materials Direct Labor Variable Ov

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Answer #1

Total cost to produce =

Direct materials = $25,000

Direct Labor = $9,500

Variable overhead = $23,000

Total variable cost = $57,500

or the company can purchase it externally for $65,000.

A increase in costs of ($65,000 - $57,500) = $7,500

Option '1' is correct

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