X Company no longer has the space necessary to produce all of its parts. A company...
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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 parts for $28.27 per unit. This year, production was 13,000 units; next year, production is expected to be 15,600 units. Total production costs for the part this year were: Materials $153,790 Direct labor 128,180 Variable overhead 78,130 Fixed overhead 48,230 Total $408,330 $11,093 of X Company's fixed overhead can be avoided if it buys the part. In addition, if X Company buys the part, $2,250. will be able to rent some equipment that will no longer be needed, to a company for X Company is uncertain about its 15,600 unit production estimate for next year. At what level of production would X Company be indifferent between making and buying the part next year? 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 $28.27 per unit. This year, production was 13,000 units; next year, production is expected to be 15,600 units. Total production costs for the part this year were: Materials $153,790 Direct labor 128,180 Variable overhead 78,130 Fixed overhead 48,230 Total $408,330 $11,093 of X Company's fixed overhead can be avoided if it buys the part. In addition, if X Company buys the part, $2,250. will be able to rent some equipment that will no longer be needed, to a company for X Company is uncertain about its 15,600 unit production estimate for next year. At what level of production would X Company be indifferent between making and buying the part next year?
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ANSWER Solution Let the indifference point unit sales be Y Relevant cost of buying 2827 Y 2250 Di... View the full answer
Related Book For
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
Posted Date:
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