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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 $11.69X + $16,500, where X is the number of units produced. A company has offered to supply this part to X Comany it for $14.39 per unit. If X Company chooses to buy the part, it will still incur fixed costs of $9,900, but it will be able to lease the resources that will become available from not making the part for $2,500.

1. If X Company buys the part next year instead of making it, and production is expected to remain at 3,300 units, it will save

A: $132 B: $149 C: $168 D: $190 E: $215 F: $243

2. If X Company makes the part next year instead of buying it, and production next year is expected to be 3,700 units, it will save

A: $483 B: $546 C: $617 D: $697 E: $788 F: $890

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