X Company currently makes a part and is considering buying it from a company has
ID: 2574196 • Letter: X
Question
X Company currently makes a part and is considering buying it from a company has offered to supply it for $15.99 per unit. This year, per-unit production costs to produce 56,000 units were:
$201,600 of the total overhead costs were variable; $17,920 of the fixed overhead costs can be avoided if X Company buys the part. In addition, the resources that were used for production can be rented to another company for $80,000. Production next year is expected to increase to 61,000 units.
3. If X Company buys the part instead of making it, it will save
4. X Company is uncertain about next year's production level. At what production level will the company be indifferent between making and buying the part?
Direct materials $5.50 Direct labor 5.30 Overhead 5.20 Total $16.00Explanation / Answer
Answer:- 3):-
Statement of comprative cost Manufaturing Amount Purchase from outside Amount Per unit $ Per unit $ Direct Material 5.50 Purchase Cost 15.99 Direct Labor 5.30 Overhead 3.60 $201600/56000 units (Only variable part) Fixed overhead 0.32 Only Avoidable cost $17920/56000 units Total Manufaturing cost 14.72 Total Purchase cost 15.99Related Questions
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