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 3,100 units were as follows:
| Per-Unit | Total | ||
| Direct materials | $3.70 | $10,444 | |
| Direct labor | 3.00 | 8,971 | |
| Variable overhead | 2.10 | 8,610 | |
| Fixed overhead | 4.90 | 17,290 | |
| Total | $14.91 | $46,321 | |
A company has offered to supply this part to X Company for $14.20 per unit. If X Company accepts the offer, it will still incur fixed costs of $9,657, but it will be able to lease the resources that will become available from not making the part for $2,100. At what production level would X Company be indifferent between making and buying the part next year?
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