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 3,400 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 3,400 units were as follows:

Per-Unit Total
Direct materials $2.40 $8,160
Direct labor 3.54 12,036
Variable overhead 3.50 11,900
Fixed overhead 4.00 13,600
Total $13.44 $45,696

A company has offered to supply this part to X Company for $12.89 per unit. If X Company accepts the offer, it will still incur fixed costs of $6,256, but it will be able to lease the resources that will become available from not making the part for $2,800. 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 Effect Of The Internal Auditing On Financial Performance

Authors: Shakir Al Ghalayini, Mohammed A. Keshta, Thabet M. Hassan

1st Edition

3656943052, 978-3656943051

More Books

Students also viewed these Accounting questions

Question

What are the role of supervisors ?

Answered: 1 week ago

Question

Identify three types of physicians and their roles in health care.

Answered: 1 week ago

Question

Compare the types of managed care organizations (MCOs).

Answered: 1 week ago