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X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $14.32 per unit.
X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $14.32 per unit. This year's per-unit production costs for 54,000 units of this part were:
Materials | $5.80 |
Direct labor [all variable] | 4.50 |
Total overhead | 4.60 |
Total | $14.90 |
Total fixed overhead was $59,400, all common and unavoidable. If X Company buys the part, the resources that were used for production can be rented out for $75,000. Production next year is expected to decrease to 49,500 units.
If X Company buys the part instead of making it, it will save___?
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