1. X Company is considering modifying one of its main products next year. The modification would make the product more attractive to customers and permit X Company to increase its price without affecting unit sales. Financial information for the product for this year was as follows:

Selling price	$9.52
Variable costs per unit	$3.90
Total fixed costs	$10,000

X Company plans to increase the selling price to $11.96. Fixed costs would increase by $3,120. At what unit sales level would X Company be indifferent between modifying the product and not modifying it?

2. The following question is two parts:

X Company is considering buying a part next year that they currently make. This year's production costs for 3,500 units were as follows:

		Per-Unit	Total
Direct materials		$3.22	$11,270
Direct labor		3.69	12,915
Variable overhead		3.60	12,600
Fixed overhead		4.10	14,350
Total		$14.61	$51,135

A company has offered to supply this part to X Company for $13.24 per unit. If X Company accepts the offer, it will still incur fixed costs of $7,032, but it will be able to lease the resources that will become available from not making the part for $2,600. Next year's expected production level is 4,000 units. 1. If X Company makes the part next year instead of buying it, it will save

2. At what production level would X Company be indifferent between making and buying the part next year?

3. X Company is considering buying a part next year that it has been making for the past several years. A company has offered to supply this part for $17.38 per unit. Budgeted production next year is 60,000 units, and budgeted production costs per-unit are:

Materials	$7.00
Direct labor	5.90
Total overhead	3.60
Total	$16.50

$66,000 of X Company's total overhead costs are fixed; $52,800 of the $66,000 are unavoidable even if it buys the part. If X Company continues to make the part instead of buying it next year, it will save ___?