X Company is considering buying a part next year that they currently make. This year's production costs for 3,500 units were as follows:

		Per-Unit	Total
Direct materials		$3.41	$11,935
Direct labor		4.65	16,275
Variable overhead		2.50	8,750
Fixed overhead		6.00	21,000
Total		$16.56	$57,960

A company has offered to supply this part to X Company for $13.71 per unit. If X Company accepts the offer, it will still incur fixed costs of $10,290, but it will be able to lease the resources that will become available from not making the part for $2,800. At what production level would X Company be indifferent between making and buying the part next year?

Answer rating: 100% (QA)

Answer To determine the production level at ... View the full answer