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Question: Baxter Doors Company currently produces the


Baxter Doors Company currently produces the doorknobs for the doors it makes and sells. The monthly cost of producing 5,000 doorknobs is as follows.
Unit-level materials $ 16,000
Unit-level labor 30,000
Unit-level overhead 4,000
Product-level costs* 32,000
Allocated facility-level costs 20,000
*Twenty percent of these costs can be avoided if the doorknobs are purchased.
Wells Company has offered to sell comparable doorknobs to Baxter for $15.20 each.
Required
1. Should Baxter continue to make the doorknobs? Support your answer with appropriate computations.
2. For $24,000 per month, Baxter could lease the manufacturing space to another company. Would this potential cash inflow affect your response to Requirement a? Explain.



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> Use the information provided in Exercise 8-1B. 1. Determine the sales and variable cost volume variances. 2. Classify the variances as favorable or unfavorable. 3. Comment on the usefulness of the variances with respect to performance evaluation and iden

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