Question

x Company is considering buying a part in 2020 that it has been making for the past several years. A company has offered to supply this part for $16.78 per unit. Budgeted production in 2020 is 56,000 units, and budgeted per-unit production costs are: Materials $7.00 Direct labor (all variable) Total overhead 5.50 Total $16.90 4.40 $100,800 of X Company's total overhead costs are fixed; $60,480 of the $100,800 are unavoidable event buys the part. Also, FX Company buys the part, it can rent the equipment that was used to make the part to another company for $80.000 3. If X Company buys the part instead of making it, it will save Submit Answer Tries 0/3 4. At what production level would X company beindifferent between making and buying the part? mit Tres 0/3

Answer 1

Solutions Vaze difference purchase price (675x nil 1939680 Direct materials scou) 392000 Direct labor (440X56000) 24640D Referant fixed overhead! (100800-cou80) 40320 variable over head (5 50 S6000-10000 207200 opportunity 80000 Total cost : 96590 939680 26240 . (3) If a company buys the part instead of making it, it will save 26240. (4) At In difference point both the alternative will cost the same: I let it be the indifference point.

fixed elements under make alternative topportunity cost 40320 + 80 000 120 320 Variable portion of fixed cost 25.5 * 56000-100800 Sboud =$3.7 Total variable portion of make alternative - tu.4+3.7 =$15.1 is fully variable@$16.78 per Brying alternative unit. at difference point 151 X+ 120320 = 16078x 1068*= 120320 X=11619.04