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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 $10.16X + $14,000, where X is the number of units produced. A company has offered to supply this part to X Company it for $12.73 per unit. If X Company chooses to buy the part, it will avoid fixed costs of $5,600, and it will be able to lease the resources that will become available from not making the part for $3,000.

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

A: $350 B: $395 C: $446 D: $504 E: $570 F: $644

2. If X Company makes the part next year instead of buying it, and production next year is expected to be 3,800 units, it will save

A: $1,166 B: $1,318 C: $1,489 D: $1,682 E: $1,901 F: $2,148

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