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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 $26.15 per unit. This year, production was 13,500 units; next year, production is expected to be 16,500 units. Total production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $135,135 125,685 84,780 29,160 $374,760 $22,453 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 $3,500. If X Company buys the part instead of continuing to make it, it will save
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