A company owns equipment that is used to manufacture important parts for its production process. Because the equipment is repeatedly breaking down, the company plans to sell the equipment for $15,000 and select one of the following alternatives: (1) acquire new equipment for $77,000 and continue to manufacture the part at the same variable cost, or (2) purchase the parts from an outside company at $4 per part. In the short run, the company should analyze the two decision alternatives by comparing the variable cost of manufacturing the parts:

Multiple Choice

• To the cost of buying the parts less $15,000.
• Plus $67,000, to the cost of buying the parts.
• Plus $77,000, to the cost of buying the parts.
• Less $15,000, to the cost of buying the parts.
• To the cost of buying the parts.