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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
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 $26.62 per unit. This year, production was 12,500 units; next year, production is expected to be 15,000 units. Per-unit production costs for the part this year were: Materials Direct labor Variable overhead Fixed overhead Total I $11.08 9.06 5.97 3.84 $29.95 $37,440 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 $3,250. If X Company buys the part instead of continuing to make it, it will save OA: $6,160 OB: $8,932 OC: $12,951 OD: $18,780 E: $27,230 OF: $39,484
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