X Company no longer has the space necessary to produce all of its parts. A...
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Accounting
X Company no longer has the space necessary to produce all of its parts. A company has offered to supply one of X Company's parts for $25.24 per unit. This year, production was 14,500 units; next year, production is expected to be 17,600 units. Total production costs for the part this year were:
Materials $156,455
Direct labor 121,510
Variable overhead 80,620
Fixed overhead 33,640
Total $392,225
$4,037 of X Company's fixed overhead can be avoided if it buys the part. In addition, if X Company buys the part, it will be able to rent some equipment that will no longer be needed, to a company for $3,250. X Company is uncertain about its 17,600 unit production estimate for next year. At what level of production would X Company be indifferent between making and buying the part next year?
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