Question
X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $15.03 per unit.
X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $15.03 per unit. This year's per-unit production costs for 57,000 units were:
Materials: $5.60
Direct labor [all variable]: 4.00
Total overhead: 5.60
Of the total overhead costs, $102,600 were fixed, and $61,560 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 $75,000. Production next year is expected to increase to 60,300 units. If X Company buys the part instead of making it, it will save how much?
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