X Company currently buys a part from a supplier for $12.96 per unit but is...
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Accounting
X Company currently buys a part from a supplier for $12.96 per unit but is considering making the part itself next year. This year, they purchased 3,300 units of this part; next year, they think they will need 3,800 units. Estimated costs to make the part are:
| Per-Unit | Total | ||
| Direct materials | $3.57 | $11,781 | |
| Direct labor | 3.11 | 10,263 | |
| Variable overhead | 3.90 | 12,870 | |
| Fixed overhead | 4.70 | 15,510 | |
| Total | $15.28 | $50,424 | |
Of the estimated fixed overhead, $6,669 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 $2,800; 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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