Use the Following Information for Questions
Hermantic, Inc -If Hermantic, Inc

Multiple Choice

Use the following information for questions
Hermantic, Inc.can produce 100 units of a component part with the following costs:
$$\begin{array} { l c } \text { Direct Materials } & \$ 30,000 \\\text { Direct Labour } & 13,000 \\\text { Variable Overhead } & 32,000 \\\text { Fixed Overhead } & \mathbf { 2 2 , 0 0 0 }\end{array}$$
-If Hermantic, Inc.purchases the units externally for $80,000, by what amount will its total costs change? Fixed costs are not avoidable if they purchase externally.

A) an increase of $80,000
B) an increase of $5,000
C) an increase of $17,000
D) a decrease of $22,000