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

Materials	$2.94
Direct labor [all variable]	4.51
Variable overhead	3.50
Fixed overhead	3.50
Total production costs	$14.45

A company has offered to supply this part for $13.30 per unit. If X Company buys the part, $5,565 of the fixed overhead can be avoided. Also if X Company buys the part, it can use the freed-up resources to increase production of another product, resulting in additional contribution margin of $2,200. Production next year is also expected to be 3,000 units. 2. If X Company buys the part instead of making it, it will save 3. At what production level would X Company be indifferent between making and buying the part?

4. X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $15.27 per unit. This year's total production costs for 55,000 units were:

Materials	$302,500
Direct labor [all variable]	242,000
Total overhead	247,500
Total production costs	$792,000

Of the total overhead costs, $60,500 were fixed, and $46,585 of these fixed overhead costs are unavoidable. If X Company buys the part, the resources that were used for production can be rented out for $80,000. Production next year is expected to increase to 58,350 units. If X Company continues to make the part instead of buying it, it will save....?

Present Value Tables (If needed)

Present Value of $1.00

Period	3%	4%	5%	6%	7%	8%	9%	10%	11%	12%
1	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909	0.901	0.893
2	0.943	0.925	0.907	0.890	0.873	0.857	0.842	0.826	0.812	0.797
3	0.915	0.889	0.864	0.840	0.816	0.794	0.772	0.751	0.731	0.712
4	0.888	0.855	0.823	0.792	0.763	0.735	0.708	0.683	0.659	0.636
5	0.863	0.822	0.784	0.747	0.713	0.681	0.650	0.621	0.593	0.567
6	0.837	0.790	0.746	0.705	0.666	0.630	0.596	0.564	0.535	0.507
7	0.813	0.760	0.711	0.665	0.623	0.583	0.547	0.513	0.482	0.452
8	0.789	0.731	0.677	0.627	0.582	0.540	0.502	0.467	0.434	0.404
9	0.766	0.703	0.645	0.592	0.544	0.500	0.460	0.424	0.391	0.361
10	0.744	0.676	0.614	0.558	0.508	0.463	0.422	0.386	0.352	0.322

Present Value of an Annuity of $1.00

Period	3%	4%	5%	6%	7%	8%	9%	10%	11%	12%
1	0.971	0.962	0.952	0.943	0.935	0.926	0.917	0.909	0.901	0.893
2	1.913	1.886	1.859	1.833	1.808	1.783	1.759	1.736	1.713	1.690
3	2.829	2.775	2.723	2.673	2.624	2.577	2.531	2.487	2.444	2.402
4	3.717	3.630	3.546	3.465	3.387	3.312	3.240	3.170	3.102	3.037
5	4.580	4.452	4.329	4.212	4.100	3.993	3.890	3.791	3.696	3.605
6	5.417	5.242	5.076	4.917	4.767	4.623	4.486	4.355	4.231	4.111
7	6.230	6.002	5.786	5.582	5.389	5.206	5.033	4.868	4.712	4.564
8	7.020	6.733	6.463	6.210	5.971	5.747	5.535	5.335	5.146	4.968
9	7.786	7.435	7.108	6.802	6.515	6.247	5.995	5.759	5.537	5.328
10	8.530	8.111	7.722	7.360	7.024	6.710	6.418	6.145	5.889	5.650