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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 $26.57 per unit. This year, production was 14,500 units; next year, production is expected to be 18,450 units. Per-unit production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $10.31 9.62 5.98 2.01 $27.92 $25,648 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 18,450 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: 6,298 OB: 7,116 OC: 8,042 OD: 9,087 E: 10,268 F: 11,603
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