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 | $3.97 | $13,498 | |
| Direct labor | 3.78 | 12,852 | |
| Variable overhead | 4.10 | 13,940 | |
| Fixed overhead | 3.30 | 11,220 | |
| Total | $15.15 | $51,510 | |
A company has offered to supply this part to X Company for $15.13 per unit. If X Company accepts the offer, it will still incur fixed costs of $5,386, but it will be able to lease the resources that will become available from not making the part for $2,600. At what production level would X Company be indifferent between making and buying the part next year?
| A: 1,454 | B: 1,933 | C: 2,571 | D: 3,420 | E: 4,549 | F: 6,050 |
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