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Biz Tech Inc. is currently purchasing a standard part for $50 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $58 per unit which include an allocated fixed cost per unit of $13. If the company decide to use the idle manufacturing space to produce 15,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing?  Group of answer choices Cost would be decreased by $120,000 Cost would be decreased or saved by $75,000 Cost would be increased by $120,000 Cost would be increased by $75,000

Biz Tech Inc. is currently purchasing a standard part for $50 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $58 per unit which include an allocated fixed cost per unit of $13. If the company decide to use the idle manufacturing space to produce 15,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing?  Group of answer choices Cost would be decreased by $120,000 Cost would be decreased or saved by $75,000 Cost would be increased by $120,000 Cost would be increased by $75,000

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 58P: Polaris Inc. manufactures two types of metal stampings for the automobile industry: door handles and...
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Biz Tech Inc. is currently purchasing a standard part for $50 per unit which is used for manufacturing different types of appliances. The company is operating at 70% capacity and can make the part at a cost of $58 per unit which include an allocated fixed cost per unit of $13.

If the company decide to use the idle manufacturing space to produce 15,000 units of parts, what would be the amount of increase or decrease in differential costs from making the part rather than purchasing? 

Group of answer choices
Cost would be decreased by $120,000
Cost would be decreased or saved by $75,000
Cost would be increased by $120,000
Cost would be increased by $75,000
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