Silverman Company manufacture Part XQZ for use in its production cycle.

The costs per unit for 5,000 units of Part XQZ are as follows:

Direct Materials $ 2

Direct Labour 12

Variable overhead 5

Fixed overhead applied 7

$26

Orr Company has offered to sell Silverman 5,000 units of Part XQZ for $27 per unit.

If Silverman accepts the offer, some of the facilities presently used to manufacture Part XQZ could be used to help with the manufacture of Part No. 1211 and Part No. 1212.

This would save $21,000 in costs in the manufacture of Part No. 1211 and save $18,000 for Part No. 1212.

Silverman has calculated that $4 of the fixed manufacturing overhead applied to part XQZ would continue even if the part is purchased from Orr company.

What amount is saved (lost) if Silverman accepts Orrs offer?

Group of answer choices

($1,000)

$49,000

$14,000

($5,000)

$19,000