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Olympic Products Inc. manufactures and distributes barbecue grills. The company normally sells 1,000 of these grills each month for a price of $140 each. The material cost for a grill is $44 and the directlabor is $22. The variable overhead cost is $13 per grill, and the fixed overhead cost is $30,000 permonth. A contract manufacturer has approached the company and offered to supply the grills ready tosell for $85 each. The company management believes that if it accepts this offer, Olympic Products willbe able to lease unused factory space for $10,000 per month.
Perform a make-versus-buy analysis.
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