X Company currently makes a part and is considering buying it from a company that has offered
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Question:
X Company currently makes a part and is considering buying it from a company that has offered to supply it for $17.76 per unit. This year, per-unit production costs to produce 18,000 units were:
Direct materials$8.00
Direct labor5.30
Overhead 5.10
Total $18.40
$39,600 of the total overhead costs were fixed. $22,176 of the fixed overhead costs are avoidable if X Company buys the part. If the company buys the part, the resources that are used to make it cannot be used for anything else. Production next year is expected to be 18,800 units.
required
If X Company continues to make the part instead of buying it, it will save?
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