The following information is for the questions below: X Company is considering buying a part...
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Accounting
The following information is for the questions below:
X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $9.29X + $20,400, where X is the number of units produced. A company has offered to supply this part to X Comany it for $11.85 per unit. If X Company chooses to buy the part, it will avoid fixed costs of $8,160, and it will be able to lease the resources that will become available from not making the part for $2,500.
1. If X Company buys the part next year instead of making it, and production is expected to remain at 3,400 units, it will save
| A: $442 | B: $642 | C: $930 | D: $1,349 | E: $1,956 | F: $2,836 |
2. If X Company buys the part next year instead of making it, and production next year is expected to be 3,900 units, it will save
| A: $346 | B: $433 | C: $541 | D: $676 | E: $845 | F: $1,056 |
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