A Company Owns Equipment That Is Used to Manufacture Important

Multiple Choice

A company owns equipment that is used to manufacture important parts for its production process. Because the equipment is repeatedly breaking down, the company plans to sell the equipment for $10,000 and select one of the following alternatives: (1) acquire new equipment for $80,000 and continue to manufacture the part at the same variable cost, or (2) purchase the parts from an outside company at $4 per part. In the short run, the company should analyze the two decision alternatives by comparing the variable cost of manufacturing the parts:

A) Plus $80,000, to the cost of buying the parts.
B) To the cost of buying the parts less $10,000.
C) Less $10,000, to the cost of buying the parts.
D) To the cost of buying the parts.
E) Plus $70,000, to the cost of buying the parts