X Company no longer has the space necessary to produce all of its parts. A...
90.2K
Verified Solution
Link Copied!
Question
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?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
