Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $9.00, not including fixed costs. If 30,402 units of the part are normally purchased during the year but could be manufactured using unused capacity, the amount of differential cost increase or decrease from making the part rather than purchasing it would be a a.$425,628 cost decrease b.$182,412 cost increase c.$152,010 cost decrease d.$152,010 cost increase
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $9.00, not including fixed costs. If 30,402 units of the part are normally purchased during the year but could be manufactured using unused capacity, the amount of differential cost increase or decrease from making the part rather than purchasing it would be a a.$425,628 cost decrease b.$182,412 cost increase c.$152,010 cost decrease d.$152,010 cost increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $14.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $9.00, not including fixed costs. If 30,402 units of the part are normally purchased during the year but could be manufactured using unused capacity, the amount of differential cost increase or decrease from making the part rather than purchasing it would be a
a.$425,628 cost decrease
b.$182,412 cost increase
c.$152,010 cost decrease
d.$152,010 cost increase
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