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A business is operating at 90% capacity and is currently purchasing a part used in...

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Accounting

A business is operating at 90% capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The part could be made internally for $20 per unit which includes allocated fixed costs of $8. If 30,000 units of the part normally purchased during the year but could be manufactured using idle capacity, what would be the amount of the increase or decrease in income resulting from making the part rather than purchasing it from the outside vendor?

A.

none of these
B.

$150,000 decrease
C.

$90,000 decrease
D.

$150,000 increase
E.

$90,000 increase

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