X Company is considering buying a part next year that they currently make. This year's...
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Accounting
X Company is considering buying a part next year that they currently make. This year's production costs for 3,400 units were as follows:
| Per-Unit | Total | ||
| Direct materials | $2.79 | $9,486 | |
| Direct labor | 3.19 | 10,846 | |
| Variable overhead | 3.30 | 11,220 | |
| Fixed overhead | 5.20 | 17,680 | |
| Total | $14.48 | $49,232 | |
A company has offered to supply this part to X Company for $12.66 per unit. If X Company accepts the offer, it will avoid fixed costs of $9,724, and it will be able to lease the resources that will become available from not making the part for $2,000. At what production level would X Company be indifferent between making and buying the part next year?
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