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X Company no longer has the space necessary to produce all of its parts. A company has offered to supply one of X Company's parts
X Company no longer has the space necessary to produce all of its parts. A company has offered to supply one of X Company's parts for $27.71 per unit. This year, production was 14,000 units; next year, production is expected to be 16,600 units. Per-unit production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $10.88 9.95 6.20 2.01 $29.04 $23,919 of X Company's fixed overhead cannot be avoided even if it buys the part. In addition, if X Company buys the part, it will be able to rent some equipment that will no longer be needed, to a company for $2,500. X Company is uncertain about its 16,600 unit production estimate for next year. At what level of production would X Company be indifferent between making and buying the part next year? OA: 9,884|OB: 11,564 Oc: 13,530 OD: 15,830 OE: 18,521 OF: 21,670
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