Pergola Industries currently produces 1,000 units of a part…
Pergola Industries currently produces 1,000 units of a part needed for its product, incurring the following costs:Direct Materials $25,000Direct Labor 8,000Variable Overhead 16,000Fixed Overhead 9,000If Pergola Industries purchases the component externally, $4,000 of the fixed costs can be avoided. At what external price per unit for would Pergola be indifferent between choosing to outsource (buy) instead of insource (make)?
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