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Song, a division of Carolina Enterprises, currently makes 110,000 units of a product that has...

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Accounting

Song, a division of Carolina Enterprises, currently makes 110,000 units of a product that has created a number of manufacturing problems. Song's costs follow.

Manufacturing costs:
Variable $ 580,000
Fixed 182,000
Allocated corporate administrative cost 68,000

If Song were to discontinue production, fixed manufacturing costs would be reduced by 80%. The relevant cost of deciding whether the division should purchase the product from an outside supplier is:

$580,000.

$793,600.

$616,400.

$725,600.

$762,000.

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