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The following information is for Questions 1 and 2 X Company is considering buying a part next year that they currently make. A company has
The following information is for Questions 1 and 2 X Company is considering buying a part next year that they currently make. A company has offered to supply it for $14.34 per unit. This year's production costs for 3,200 units were as follows: Direct materials Direct labor Total overhead Total costs Per-Unit $3.24 4.99 9.00 $17.23 Total $10,368 15,968 28,800 $55,136 $12,160 of total overhead is variable. If X Company chooses to buy the part, it will avoid fixed costs of $9,984. 1. If X Company buys the part next year instead of making it, and production is expected to remain at 3,200 units, it will save Tries 0/3 2. If X Company buys the part next year instead of making it, and production next year is expected to be 3,500 units, it will save Tries 0/3
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