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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 $11.53X + $10,500, where X is the number of units produced. A company has offered to supply this part to X Comany it for $14.19 per unit. If X Company chooses to buy the part, it will avoid fixed costs of $5,250, and it will be able to lease the resources that will become available from not making the part for $2,200.

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: $1,052 B: $1,398 C: $1,860 D: $2,474 E: $3,290 F: $4,376

2. If X Company makes the part next year instead of buying it, and production next year is expected to be 3,900 units, it will save

A: $1,653 B: $2,198 C: $2,924 D: $3,889 E: $5,172 F: $6,879

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