Question

Name: Angela Laziora Questions 1 and 2 refer to the following information: X Company is considering buying a part in 2020 that it made in 2019. For 2020, the bude $10.41X + $12,250, where X is the number of units produced. A company has offered to supply $13.80 per unit. If X Company accepts the offer, it will avoid fixed costs of $6,615, but it will with the resources that were used to produce the part. In 2019, 3,500 units of the part were produ will be needed. 019. For 2020, the budgeted production cost function is mpany has offered to supply this part to X Company for avoid fixed costs of $6,615, but it will not be able to do anything 19, 3,500 units of the part were produced; in 2020, 3,800 units 8 pt 1. If X Company makes the part in 2020 instead of buying it, it will save 1. AO $3,344 BO 3,913 CO 84,578 DO 85,366 EO 86,267 FO 87,332 8 pt. At what production level would X Company be indifferent between making and buying the part in 2020? 2. A 1,467 BO 1,951 CO 2,695 DO 3,452 EO 4,591 TO 6,106 nud 4 refer to the following information:

Answer 1

1. Relevant costs to buy = 3,800 * $13.8 per unit

= $52,440

Relevant costs to make = ($10.41 * 3,800) + $6,615

= $46,173

Savings = $52,440 - $46,173

= $6,267

The answer is E.

2. Let the production level be P

$10.41 P + $6,615 = $13.8 P

$3.39 P = $6,615

P = 1,951

The answer is B.