lota Company manufactures a component used in its main product. During the current year, the costs to produce 20,000 units of this component were $225,000, consisting of: Variable (per unit) Fixed Direct Materials $4.00 Direct Labor $2.00 Manufacturing Overhead $1.50 $ 75,000 $7.50 Another company has offered to manufacture the 20,000 components for lota for $12.00 each. If lota buys the components, all variable costs and 70% of the fixed costs are avoidable, and the company can rent out the space currently used to manufacture the components for $40,000 per year. What is the financial advantage (disadvantage) to lota of making the parts? ($ 2,500) o $15,000 O ($25,000) $27,500 QUESTION 10 Kappa Company is deciding whether or not to drop one of its production departments, currently reporting a loss of $45,000. The loss consists of an $80,000 contribution margin and fixed expenses of $125,000. If the department is dropped, $70,000 of the fixed expenses would be eliminated. The financial advantage (disadvantage) to Kappa of dropping the department is: O $ 45,000 $ 70,000 O ($ 10,000) ($25,000)