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10. XYZ Company is currently producing 10,000 units of Part #43 each year. In benchmarking...

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10. XYZ Company is currently producing 10,000 units of Part #43 each year. In benchmarking the costs for Part #43, XYZ discovered an outside supplier could provide 10,000 units at $22.25 each. The costs of Part #43 are as follows: $12.75 1.60 Direct materials Direct labor Variable overhead Fixed overhead Total 4.35 6.30 $25.00 Of the fixed overhead, $32,000 is directly traceable to the production of Part #43; the remainder is allocated costs of the factory and general staffing costs. The space used to manufacture Part #43 would remain unused if XYZ does not produce the part. What would be the change in profits if XYZ bought the part from the outsider? a. $27,500 increase b. $3,500 decrease c. $35,500 decrease d. no change e. None of the above are correct

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