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Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $17.

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Answer #1

Fixed costs are sunk cost, that is why not considered for decision making.

Purchase cost = 17

Manufacturing cost = 12 (variable)

Profit in manufacturing = 17-12 = 5

Hence, cost will decrease by 5*35802 = 179010

A is correct option

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