PART A. Starling Co. is considering disposing of a machine with a book value of $24,900 and estimated remaining life of five years. The old machine can be sold for $5,300. A new high-speed machine can be purchased at a cost of 65,500. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,400 to $20,100 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is

a.increase of $43,700 b.increase of $56,810 c.decrease of $43,700 d.decrease of $56,810

PART B .The following data is given for the Starling Co. :

Budgeted production (at 100% of normal capacity)	1,017 units
Actual production	966 units
Materials:
Standard price per pound	$1.82
Standard pounds per completed unit	10
Actual pounds purchased and used in production	9,370
Actual price paid for materials	$19,209
Labor:
Standard hourly labor rate	$14.96 per hour
Standard hours allowed per completed unit	4.6
Actual labor hours worked	4,974.9
Actual total labor costs	$75,867
Overhead:
Actual and budgeted fixed overhead	$1,086,000
Standard variable overhead rate	$26.00 per standard labor hour
Actual variable overhead costs	$139,297
Overhead is applied on standard labor hours.

Round your final answer to the nearest dollar. Do not round interim calculations.

The fixed factory overhead volume variance is

a.$54,460 unfavorable b.$54,460 favorable c.$23,763 unfavorable d.$23,763 favorable

Part C. Starling Co. is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $18.00 per unit. The unit cost for the business to make the part is $21.00, including fixed costs, and $11.00, excluding fixed costs. If 32,913 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

a.$98,739 cost increase b.$592,434 cost decrease c.$230,391 cost decrease d.$230,391 cost increase