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X Company currently buys a part from a supplier for $13.46 per unit but is considering making the part itself next year. This year, they
X Company currently buys a part from a supplier for $13.46 per unit but is considering making the part itself next year. This year, they purchased 3,000 units of this part; next year, they will need 3,400 units. Estimated costs to make the part next year are: Direct materials Direct labor Variable overhead Fixed overhead Per-Unit $2.50 3.75 4.30 4.60 $15.15 Total $7,500 11,250 12,900 13,800 $45,450 Total Of the estimated fixed overhead, $7,314 would be additional fixed overhead costs; the remainder would be common costs allocated to the part. X Company currently receives $2,100 a year by renting unused factory space, but it will have to use this space to make the part. If X Company makes the part instead of continuing to buy it, it will save A: $480 B: $562 OC: $657 OD: $769 E: $899 F: $1,052
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