X Company is considering buying a part next year that they currently make. A company has offered to supply it for $14.78 per unit. This year's production costs for 3,400 units were as follows:

		Per-Unit	Total
Direct materials		$3.74	$12,716
Direct labor		4.76	16,184
Total overhead		7.80	26,520
Total costs		$16.30	$55,420

$13,260 of total overhead is variable. If X Company chooses to buy the part, it will still incur fixed costs of $5,304.

1. If X Company makes the part next year instead of buying it, and production is expected to remain at 3,400 units, it will save

13124

Incorrect.

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2. If X Company makes the part next year instead of buying it, and production next year is expected to be 3,700 units, it will save

13580

Incorrect.

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