Question1

X Company is considering a modification to one of its main products that would make it more attractive to customers. A market research study costing $5,600 was conducted, and it indicated that the company could increase the price of the product by $2.22 with no decrease in unit sales; the current price is $9.90. Variable costs for the product are $4.04 and will not change as a result of the modification, but additional equipment would have to be rented, increasing fixed costs from $10,140 to $14,270. At what unit sales level would X Company be indifferent between modifying the product and not modifying it?

Question 2

X Company is considering buying a part next year that they currently make. This year's production costs for 3,100 units were:

		Total	Per-Unit
Materials		$11,160	$3.60
Direct labor [all variable]		11,687	3.77
Variable overhead		11,160	3.60
Fixed overhead		17,050	5.50

A company has offered to supply this part for $13.37 per unit. If X Company buys the part, $8,866 of the fixed overhead can be avoided. Also if X Company buys the part, it can use the freed-up resources to increase production of another product, resulting in additional contribution margin of $2,800. X Company is uncertain what production will be next year. At what production level would it be indifferent between making and buying the part?

Q3

X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $15.54 per unit. This year's per-unit production costs for 57,000 units were:

Materials	$6.10
Direct labor [all variable]	4.30
Total overhead	4.60

Of the total overhead costs, $74,100 were fixed, and $48,165 of these fixed overhead costs are unavoidable. If X Company buys the part, the resources that were used for production can be rented to another company for $70,000. Production next year is expected to increase to 60,650 units. If X Company continues to make the part instead of buying it, it will save _________?