Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $13.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $11.00, excluding fixed costs. If 37,870 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? Oa. $302,960 cost increase Ob. $492,310 cost decrease Oc. $75,740 cost increase Od. $75,740 cost decrease
Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $13.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $11.00, excluding fixed costs. If 37,870 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? Oa. $302,960 cost increase Ob. $492,310 cost decrease Oc. $75,740 cost increase Od. $75,740 cost decrease
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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![Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for
$13.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $11.00, excluding
fixed costs. If 37,870 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?
Oa. $302,960 cost increase
Ob. $492,310 cost decrease
Oc. $75,740 cost increase
Od. $75,740 cost decrease](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa350ad71-f691-422f-a66f-182830a1a369%2Fe8119fe9-f0eb-4d99-af8f-5fd6f17438d3%2Fyn6s0tf_processed.png&w=3840&q=75)
Transcribed Image Text:Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for
$13.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs and $11.00, excluding
fixed costs. If 37,870 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?
Oa. $302,960 cost increase
Ob. $492,310 cost decrease
Oc. $75,740 cost increase
Od. $75,740 cost decrease
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