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X Company is considering buying a part next year that it currently makes. The budgeted...

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Accounting

X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $9.84X + $9,900, where X is the number of units produced. A company has offered to supply this part to X Comany it for $12.40 per unit. If X Company chooses to buy the part, it will avoid fixed costs of $3,960, and it will be able to lease the resources that will become available from not making the part for $2,700.

1. If X Company makes the part next year instead of buying it, and production is expected to remain at 3,300 units, it will save A: $404 B: $586 C: $850 D: $1,233 E: $1,788 F: $2,593

2. If X Company makes the part next year instead of buying it, and production next year is expected to be 3,800 units, it will save A: $1,005 B: $1,257 C: $1,571 D: $1,964 E: $2,454 F: $3,068

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