X Company is considering buying a part next year that they currently make. This year's production costs for 3,500 units were as follows:

		Per-Unit	Total
Direct materials		$3.80	$13,300
Direct labor		3.12	10,920
Variable overhead		3.90	13,650
Fixed overhead		3.40	11,900
Total		$14.22	$49,770

A company has offered to supply this part to X Company for $13.49 per unit. If X Company accepts the offer, it will still incur fixed costs of $5,712, but it will be able to lease the resources that will become available from not making the part for $2,900. Next year's expected production level is 3,900 units. 11. If X Company makes the part next year instead of buying it, it will save

A: $1,038

B: $1,173

C: $1,325

D: $1,497

E: $1,692

F: $1,912

Tries 0/99

12. At what production level would X Company be indifferent between making and buying the part next year?

A: 818

B: 1,088

C: 1,447

D: 1,924

E: 2,559

F: 3,404