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

Materials $8,480
Direct labor [all variable] 11,520
Variable overhead 13,120
Fixed overhead 13,120
Total $46,240

A company has offered to supply this part for $11.37 per unit. If X Company buys the part, $6,560 of the fixed overhead can be avoided. 14. If production next year is expected to be the same as this year, how much can X Company save by buying the part instead of making it?

15. If production next year is expected to be 3,600 units, how much can X Company save by buying the part instead of making it?

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Question 14 :( )

Question 15:( )

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