Sage Company is operating at 90% of capacity and is currently purchasing a part used in...
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15.00 per unit. The unit cost for the business to make the part is $22.00, including fixed costs, and $9.00, excluding fixed costs. If 38,797 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $232,782 cost decrease b. $271,579 cost increase c. $581,955 cost decrease d. $232,782 cost increase PreviousNext
Homework Answers
Answer:
Cost would be decreased by the following amount=
= ($15 - $9) × 38797 units = $232782
Option A. is correct answer.
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Sage Company is operating at 90% of capacity and is currently
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