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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 $27.87 per unit. This year, production was 11,000 units; next year, production is expected to be 13,000 units. Total production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $128,040 109,450 62,920 28,270 $328,680 $25,160 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 another company for $3,750. If X Company continues to make the part, it will save Tries 0/4
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