X Company currently buys a part from a supplier for $13.18 per unit but is...
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Accounting
X Company currently buys a part from a supplier for $13.18 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part; next year, they think they will need 3,600 units. Estimated costs to make the part are:
Per-Unit
Total
Direct materials
$2.71
$8,672
Direct labor
4.17
13,344
Variable overhead
4.00
12,800
Fixed overhead
4.60
14,720
Total
$15.48
$49,536
Of the estimated fixed overhead, $6,771 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused factory space for $2,900; it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save ___________
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