X Company is considering buying a part next year that they currently make. This year's...
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X Company is considering buying a part next year that they currently make. This year's production costs for 3,300 units were as follows:
Per-UnitTotal
Direct materials$3.48$11,484
Direct labor4.33 14,289
Variable overhead 2.50 8,250
Fixed overhead4.40 14,520
Total$14.71$48,543
A company has offered to supply this part to X Company for $12.99 per unit. If X Company accepts the offer, it will avoid fixed costs of $6,534, and it will be able to lease the resources that will become available from not making the part for $2,000. Next year's expected production level is 3,700 units.
11. If X Company makes the part next year instead of buying it, it will save
A: $953B: $1,382 C: $2,004 D: $2,906E: $4,213 F: $6,109
Tries 0/99
12. At what production level would X Company be indifferent between making and buying the part next year?
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