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Question
Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures the media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $39,000 per month. If they outsource, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $1,000 per month of rental income. At what contract rate would the two alternatives produce the same operational income?
A) $480 per unit
B) $499 per unit
C) $388 per unit
D) $295 per unit
Answer
This answer is hidden. It contains 134 characters.
Related questions
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