Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

X Company is considering buying a part next year that they currently make. This year's production costs for 3,000 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 3,000 units were as follows:

Per-Unit Total
Direct materials $3.41 $10,230
Direct labor 3.46 10,380
Variable overhead 4.20 12,600
Fixed overhead 4.80 14,400
Total $15.87 $47,610

A company has offered to supply this part to X Company for $14.22 per unit. If X Company accepts the offer, it will avoid fixed costs of $7,776, and it will be able to lease the resources that will become available from not making the part for $2,100. At what production level would X Company be indifferent between making and buying the part next year?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting IFRS Principles

Authors: Ilse Lubbe, Goolam Modack, Alex Watson

4th Edition

0199049238, 9780199049233

More Books

Students also viewed these Accounting questions

Question

What are the HRM implications of this type of merger?

Answered: 1 week ago

Question

What is an RPIC, and where was it required?

Answered: 1 week ago