Question
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
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 $26.42 per unit. This year, production was 14,000 units; next year, production is expected to be 16,000 units. Total production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total $158,900 114,660 88,760 40,880 $403,200 $8,176 of X Company's fixed overhead can be avoided 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 $3,000. If X Company buys the part instead of continuing to make it, it will save OA: $2,536 B: $2,866 C: $3,238 D: $3,659 E: $4,135 OF: $4,672 Submit Answer Tries 0/99
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