13-23 The Reno Company manufactures Part No. 498 for use..

Cost Savings from External Purchase The Reno Company manufactures Part No. 498 for use in its production cydle. The cost per unit for 20,000 units of Part No. 498 is as follows: 13-23 Direct materials6 Variable overhead...12 16 $64 Fixed overhead applied... The Tray Company has offered to sell 20,000 units of Part No. 498 to Reno for $60 per unit Reno will make the decision to buy the part from Tray if it produces a net incremental benefit $25,000 for Reno. If Reno accepts Tray's offer, $9 per unit of the fixed overhead applied would be tally eliminated. Furthermore, Reno has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575. Required. How much savings must be attained in the production of Part No. 575 in order to produce a net incremental benefit of $25,000? (AICPA adapted)