Solution 1 (X company):
Relevant cost of buying 3800 parts = 3800*$14.86 = $56,468
Relevant cost to make = Variable manufacturing costs + Avoidable fixed cost
= (3800*$11.55) + ($19,380- $8,915)
= $54,355
Net savings if company make the part = $56,468 - $54,355 = $2,113
Hence option B is correct.
Solution 2:
Let at X units, company will be indifferent in making and buying the part.
Now
$14.86 X = $11.55 X + $10,465
X = $10,465 / $3.31
= 3162 units
Hence option E is correct.
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