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Business, 06.05.2020 02:26 iretae

Sheridan, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:

Direct materials and direct labor $13
Variable overhead 5
Fixed overhead 8
Total $26

Saran Company has contacted Sheridan with an offer to sell it 5900 of the wickets for $20 each. If Sheridan makes the wickets, variable costs are $18 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable.

Should Sheridan make or buy the wickets?

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