X Company currently makes a part and is considering buying it from a company has...
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Accounting
X Company currently makes a part and is considering buying it from a company has offered to supply it for $13.86 per unit. This year, per-unit production costs to produce 56,000 units were:
Direct materials
$5.40
Direct labor
4.00
Overhead
4.30
Total
$13.70
$151,200 of the total overhead costs were variable; $32,256 of the fixed overhead costs can be avoided if X Company buys the part. In addition, the resources that were used for production can be rented to another company for $70,000. Production next year is expected to increase to 60,100 units. 3. If X Company continues to make the part instead of buying it, it will save ?
4. X Company is uncertain about next year's production level. At what production level will the company be indifferent between making and buying the part?
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