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14. Ahringer Company makes 5,000 units per year of a part Z it uses in the products it manufactures. The unit product cost of this
14. Ahringer Company makes 5,000 units per year of a part Z it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials. Direct labor Variable manufacturing overhead... Fixed manufacturing overhead Unit product cost...... $20.00 22.00 2.00 15.00 $59.00 An outside supplier has offered to sell Ahringer company the 5,000 units of partZ for $50.00 a unit. If the part were purchased from the outside supplier, $5.00 of the fixed manufacturing overhead cost will be avoided. In addition, the production facilities now being used to produce part Z can be rented to another company for $20,000 per year. What is the net increase (decrease) in profit if the company decided to purchase the part? a. $15,000 decrease in profit b. $45,000 increase in profit c. $25,000 increase in profit d. $15,000 increase in profit e. $20,000 increase in profit
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