1. X Company currently buys a part from a supplier for $13.77 per unit but...
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Accounting
1. X Company currently buys a part from a supplier for $13.77 per unit but is considering making the part itself next year. Estimated costs to make the part next year are:
| Per-Unit | Total | ||
| Direct materials | $2.40 | $7,920 | |
| Direct labor | 4.98 | 16,434 | |
| Variable overhead | 3.40 | 11,220 | |
| Fixed overhead | 3.90 | 12,870 | |
| Total | $14.68 | $48,444 | |
Of the estimated fixed overhead, $5,534 are common costs that would be allocated to the part; the remainder would be additional fixed overhead costs. X Company currently receives $3,000 a year by renting out unused factory space, but it will have to use this space to make the part.
This year, they purchased 3,300 units of this part, but they're not certain how many units they will need next year.
How many units will make them indifferent between continuing to buy the part and making it?
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