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Answer :
Answer: $418,000
Explanation:
The Fixed costs are unavoidable so even if Brenton bought from an outside supplier they would still incur it.
It is therefore not a relevant cost.
The cost of producing internally therefore is;
= 3 + 5 + 3
= $11 per unit
Cost = 38,000 * 11
= $418,000
Maximum they should pay for the part outside is $418,000. Anything more and they would be better off producing for themselves.
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