Question
X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $10.01X + $16,500,
X Company is considering buying a part next year that it currently makes. The budgeted cost function to produce the part is $10.01X + $16,500, 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 $6,600, 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 makes the part next year instead of buying it, and production is expected to remain at 3,300 units, it will save
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
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