X Company is considering buying a part next year that they currently make. This year's production costs for 9,900 units of this part were:

	Total	Per-Unit
Materials	$28,215	$2.85
Direct labor [all variable]	30,690	3.10
Variable overhead	40,590	4.10
Fixed overhead	32,670	3.30

A company has offered to supply this part for $12.29 per unit. If X Company buys the part, $6,861 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 $2,500. Production next year is expected to be the same as this year. 1. The costs of making the part are less than the costs of buying the part by $12,815

You are correct. Your receipt no. is 164-1787

Previous Tries

2. (ONE TRY ONLY) X Company is uncertain what next year's required production will be. At what production level will X Company be indifferent between making and buying the part?

A: 1,369

B: 1,712

C: 2,140

D: 2,674

E: 3,343

F: 4,179

X Company is considering buying a part next year that they currently make. This year's production costs for 9,900 units of this part were: A company has offered to supply this part for $12.29 per unit. If X Company buys the part, $6,861 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 $2,500. Production next year is expected to be the same as this year. 1. The costs of making the part are less than the costs of buying the part by $12,815 2. (ONE TRY ONLY) X Company is uncertain what next year's required production will be. At what production level will X Company be indifferent between making and buying the part