Question
X Company is considering buying a part next year that they currently make. This year's total production costs for 94,500 units of this part were:
X Company is considering buying a part next year that they currently make. This year's total production costs for 94,500 units of this part were:
Materials $509,355 Direct labor 435,645 Variable overhead 344,925 Fixed overhead 174,825 Total $1,464,750
A company has offered to supply this part for $14.48 per unit. If X Company buys the part, $68,182 of the total fixed overhead is avoidable, but there is no alternative use of the resources that will become idle. Production next year is expected to decrease by 3,500 units.
If X Company continues to make the part, it will save
X Company is considering buying a part next year that they currently make. This year's total production costs for 94,500 units of this part were:
| Materials | $509,355 |
| Direct labor | 435,645 |
| Variable overhead | 344,925 |
| Fixed overhead | 174,825 |
| Total | $1,464,750 |
A company has offered to supply this part for $14.48 per unit. If X Company buys the part, $68,182 of the total fixed overhead is avoidable, but there is no alternative use of the resources that will become idle. Production next year is expected to decrease by 3,500 units.
If X Company continues to make the part, it will save
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Efficient Auditing Of Private Companies A Guide To Audit Planning Implementation And Control
Authors: The Institute Of Chartered Accountants
1st Edition
1841400432, 978-1841400433
