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After seeing the new predetermined overhead rate, the production manager admitted that he probably wouldn't be eliminate all of the 6,000 direct labor hours. He had been hoping to accomplish the reduction by not replacing workers who retire or quit, but that had not been possible. As a result, the real labor savings would be only about 2,000 hours-one worker. Given this additional information, evaluate the original decision to acquire the automated machine from Sunghi Industries.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9975721

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