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X Company is considering buying a part next year that it currently makes. The budgeted...

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Accounting

X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $9.96X + $21,000, where X is the number of units produced. A company has offered to supply this part to X Comany it for $12.45 per unit. If X Company chooses to buy the part, it will still incur fixed costs of $12,600, but it will be able to lease the resources that will become available from not making the part for $2,700.

1. If X Company buys the part next year instead of making it, and production is expected to remain at 3,500 units, it will save

A: $1,793 B: $2,385 C: $3,172 D: $4,219 E: $5,611 F: $7,463
Tries 0/99

2. If X Company buys the part next year instead of making it, and production next year is expected to be 4,000 units, it will save

A: $790 B: $893 C: $1,009 D: $1,140 E: $1,288 F: $1,456

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