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2. (3 points) Boys ‘R Us sells suits to young men. Management is considering vertical integration. It is determined that the company can produce its own suits for a fixed annual cost of $500,000 and a production cost of $150 per suit. The current demand is 40,000 units. A potential supplier charges a $700,000 fixed annual cost. 1) What will be the total costs for Boys ‘R Us to produce its own suits? (1 point) 2) What will be the variable cost per unit from the potential supplier that would make the total costs of the supplier indifferent from the total costs of Boys’ R Us? (2 points)
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