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X Company is considering buying a part next year that they currently make. This year's production costs for 3,100 units were as follows: Per-Unit Total
X Company is considering buying a part next year that they currently make. This year's production costs for 3,100 units were as follows:
Per-Unit | Total | ||
Direct materials | $3.45 | $10,695 | |
Direct labor | 4.65 | 14,415 | |
Variable overhead | 3.00 | 9,300 | |
Fixed overhead | 4.50 | 13,950 | |
Total | $15.60 | $48,360 |
A company has offered to supply this part to X Company for $14.40 per unit. If X Company accepts the offer, it will still incur fixed costs of $6,556, but it will be able to lease the resources that will become available from not making the part for $2,000. At what production level would X Company be indifferent between making and buying the part next year?
A: 684 | B: 910 | C: 1,210 | D: 1,609 | E: 2,140 | F: 2,847 |
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