Question
X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $10.11X + $19,200,
X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $10.11X + $19,200, where X is the number of units produced. A company has offered to supply this part to X Comany it for $12.77 per unit. If X Company chooses to buy the part, it will avoid fixed costs of $9,600, and it will be able to lease the resources that will become available from not making the part for $2,500.
1. If X Company buys the part next year instead of making it, and production is expected to remain at 3,200 units, it will save
A: $1,637 | B: $1,915 | C: $2,240 | D: $2,621 | E: $3,067 | F: $3,588 |
Tries 0/99 |
2. If X Company buys the part next year instead of making it, and production next year is expected to be 3,600 units, it will save
A: $1,347 | B: $1,576 | C: $1,844 | D: $2,157 | E: $2,524 | F: $2,953 |
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