Peluso company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. peluso's plant manager is considering making the headlights now being purchased from an outside supplier for $11 each. the peluso plant has idle equipment that could be used to manufacture the headlights. the design engineer estimates that each headlight requires $4 of direct materials, $3 of direct labor, and $6.00 of manufacturing overhead. forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. a decision by peluso company to manufacture the headlights should result in a net gain (loss) for each headlight of:
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