Determine the amount of differential cost increase

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Reference no: EM13777566

A business 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 $20.00, including fixed costs, and $11.00, not including fixed costs. If 31,095 units of the part are normally purchased during the year but could be manufactured using unused capacity, determine the amount of differential cost increase or decrease from making the part rather than purchasing it.

$124,380 cost decrease

$466,425 cost decrease

$155,475 cost increase

$124,380 cost increase

Reference no: EM13777566

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