Aspen Inc., manufactures 10,000 computer chips. Currently, the costs per unit are as follows: Direct materials $ 1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total $24.00 Link, Corp., has contacted Aspen with an offer to sell 10,000 of the chips for $22.00 per chip. If Aspen accepts the proposal, $30,000 of fixed overhead will be eliminated. Should Aspen make or buy the chips? What is the difference between the two alternatives?

 

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