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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 $26.73 per unit. This year, production was 11,500 units; next year, production is expected to be 14,050 units. Total production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $117,645 109,825 73,025 27,830 $328,325 $23,377 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 $2,000. X Company is uncertain about its 14,050 unit production estimate for next year. At what level of production would X Company be indifferent between making and buying the part next year? Submit Answer Tries 0/5
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