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A compamy incurs the following casts per unix in producirie 45,000 units of Part xy2 annisally which is a part that is ured in making
A compamy incurs the following casts per unix in producirie 45,000 units of Part xy2 annisally which is a part that is ured in making its product Instead of making Part XYZ, the company can purchase the part at a price of $12 per unit. The company has determined that 70% of the fxed manufacturing overhead cannot be avoided even if the part is purchased. Additionally, if the company purchases Part XYZ, it can generate rental income of $40,000 annually by renting out the space in the factory that is currently being used to make the part. What would be the effect on profitability if the company decides to purchase Part XYZ instead of continuing to make it? Increase in profitability of $85,000 Increase in profitability of $39,100 Increase in profitability of $23,800 Decrease in profitability of $22,100 None of the above
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