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Question - Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $16.00 per unit. The unit cost for the business to make the part is $20.00, including fixed costs, and $11.00, excluding fixed costs. If 31,099 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. $124,396 cost increase
b. $497,584 cost decrease
c. $155,495 cost increase
d. $155,495 cost decrease
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