X Company currently makes a part and is considering buying it from a company that has...

50.1K

Verified Solution

Question

Accounting

X Company currently makes a part and is considering buying itfrom a company that has offered to supply it for $19.45 per unit.This year, per-unit production costs to produce 54,000 unitswere:
Direct materials $8.50
Direct labor 6.50
Overhead Â Â Â 4.10
Total Â Â Â $19.10

$167,400 of the total overhead costs were variable; $39,960 of thefixed overhead costs cannot be avoided even if X Company buys thepart. If the company buys the part, the resources that are used tomake it cannot be used for anything else. Production next year isexpected to increase to 57,400 units.

If X Company continues to make the part instead of buying it, itwill save _______

Answer & Explanation Solved by verified expert

4.0 Ratings (772 Votes)

Total overheads of producing 54000 units 54000 x 410 221400 Variable overheads of producing 54000 units 167400 Hence variable overhead per unit See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Direct materials	$8.50
Direct labor	6.50
Overhead	Â Â Â 4.10
Total	Â Â Â $19.10