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 3,100 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 3,100 units were as follows:

Per-Unit Total
Direct materials $2.74 $8,494
Direct labor 3.07 9,517
Variable overhead 2.90 8,990
Fixed overhead 5.90 18,290
Total $14.61 $45,291

A company has offered to supply this part to X Company for $12.08 per unit. If X Company accepts the offer, it will avoid fixed costs of $9,694, and it will be able to lease the resources that will become available from not making the part for $2,700. 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

Step: 3

blur-text-image

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

The Politics Of Internal Auditing

Authors: Dr. Larry Rittenberg, Patty Miller

1st Edition

0894139053, 978-0894139055

More Books

Students also viewed these Accounting questions

Question

Explain the causes of indiscipline.

Answered: 1 week ago