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 3,400 units were as follows:
Per-Unit
Total
Direct materials
$3.97
$13,498
Direct labor
3.78
12,852
Variable overhead
4.10
13,940
Fixed overhead
3.30
11,220
Total
$15.15
$51,510
A company has offered to supply this part to X Company for $15.13 per unit. If X Company accepts the offer, it will still incur fixed costs of $5,386, but it will be able to lease the resources that will become available from not making the part for $2,600. At what production level would X Company be indifferent between making and buying the part next year?
A: 1,454
B: 1,933
C: 2,571
D: 3,420
E: 4,549
F: 6,050
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