Questions 2 and 3 refer to the following problem:

X Company is considering buying a part next year that they currently make. This year's per-unit production costs for 3,200 units were:

Materials	$3.09
Direct labor [all variable]	3.23
Variable overhead	3.60
Fixed overhead	5.40
Total production costs	$15.32

A company has offered to supply this part for $12.24 per unit. If X Company buys the part, $9,158 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 $2,200. Production next year is also expected to be 3,200 units. 2. If X Company buys the part instead of making it, it will save:______________

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

4. X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $16.99 per unit. This year's total production costs for 57,000 units were:

Materials	$376,200
Direct labor [all variable]	296,400
Total overhead	302,100
Total production costs	$974,700

Of the total overhead costs, $96,900 were fixed, and $59,109 of these fixed overhead costs are unavoidable. If X Company buys the part, the resources that were used for production can be rented out for $75,000. Production next year is expected to increase to 60,050 units.

4) If X Company buys the part instead of making it, it will save:___________