Lancaster Company Currently Produces 10,000 Units of a Key Part

Multiple Choice

Lancaster Company currently produces 10,000 units of a key part at a total cost of $210,000.Variable costs are $170,000.Of the fixed cost, $10,000 relate specifically to this part.The remaining fixed costs are unavoidable. Another manufacturer has offered to supply the part for $190 per unit.The facilities currently used to manufacture the part could be used to manufacture a new product with an expected contribution margin of $25,000.Alternately, the facilities could be rented out at $55,000._____ is the opportunity cost to Lancaster Company for making the part.

A) $20,000)
B) $55,000
C) $25,000
D) $10,000)