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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 Unit-level materials

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: Unit-level materials.................................$16,000 Unit-level labor.......................................30,000 Unit-level overhead....................................4,000 Product-level costs*.................................32,000 Allocated facility-level costs........................20,000 *Twenty percent of these costs can be avoided if the doorknobs are purchased. 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.

Jun 25 2020 View more View Less

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