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In what context do you ask this question, and in relation to what country?
Answer:
relevant cost 31 per unit for total 244,900
buy cost 40 per unit for total 316,000
differential (9) (71,100)
It should continue to make the product.
Explanation:
Materials 17
Labor 11
Fixed OVerhead 3
17+11+3 = 31 Manufacturing cost
The company is producing the handlebars at $31 and allocating $9 of the plant cost
The relevant cost for the comparisson should be $31 not $40
Threfore comparing only he relevant cost it is a better deal to mantain the habdlebars production instead of buying.