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?Cengage CengageNOW| Online teachin × Chegg Study l Guided Solution × + .Search Test: Ch 25-5 Test Time Remaining: 1:14:36 Email Instructor Questions D Muliple Choice 25-006 Algorithmic 5. O 6. C Save Submit Test for Grading Question 7 of 19 A business is operating at 90% of capacitv and is currently purchasing a part used in its manu acturing operations for $16.00 per unit. The unit cost or the business to make the part is $22.00 including fixed costs, and $9.00, not including fixed costs. If 38,474 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. Select the correct answer 8. 10. O $269,318 cost decrease 11. 12. 13. O 14. O O $615,584 cost decrease O $269,318 cost increase O $230,844 cost increase 18. O 19 O b Multiple Choice 25-006 Algorithmic Question 7 of 19 Email Instructor Save Submit Test for Grading 1:14 PM O Type here to search ^# 4) 17/2018

Explanation / Answer

Option 1,$ 269318 cost decrease is the correct answer.

The cost decrease is calculated as follows

Purchase of Part = $16

Less expenses not including fixed Cost= $9

= 16-9= $7

Number of units=38474

Cost decrease = 38474*$7= $269318.

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