Per unit | Total 3300 units | |||
Make | Buy | Make | Buy | |
Direct materials | 2.92 | 9636 | ||
Direct labor | 4.89 | 16137 | ||
Variable overhead | 2.80 | 9240 | ||
Avoidable fixed overhead | 8894 | |||
Opportunity cost | 2400 | |||
Outside Purchase cost | 13.81 | 45573 | ||
Total cost | 10.61 | 13.81 | 46307 | 45573 |
Difference in cost = 46307-45573 = 734 | ||||
Decrease in production level = 734/(13.81-10.61)= 229 | ||||
Indifferent production level = 3300+229 = 3529 | ||||
3529 is correct answer |
X Company is considering buying a part next year that they currently make. This year's production...
X Company is considering buying a part next year that they currently make. This year's production costs for 3,500 units were as follows: Per-Unit Total Direct materials $3.41 $11,935 Direct labor 4.65 16,275 Variable overhead 2.50 8,750 Fixed overhead 6.00 21,000 Total $16.56 $57,960 A company has offered to supply this part to X Company for $13.71 per unit. If X Company accepts the offer, it will still incur fixed costs of $10,290, but it will be able to lease...
X Company is considering buying a part next year that they currently make. This year's production costs for 3,100 units were as follows: Direct materials Direct labor Variable overhead Fixed overhead Total Per-Unit $2.48 3.09 4.40 3.00 $12.97 Total $7,688 9,579 13,640 9,300 $40,207 A company has offered to supply this part to X Company for $12.38 per unit. If X Company accepts the offer, it will still incur fixed costs of $4,743, but it will be able to lease...
X Company is considering buying a part next year that they currently make. This year's production costs for 3,500 units were as follows: Per-Unit $3.34 4.71 Direct materials Direct labor Variable overhead Fixed overhead Total Total $11,690 16,485 15,750 12,250 $56,175 4.50 3.50 $16.05 A company has offered to supply this part to X Company for $15.89 per unit. If X Company accepts the offer, it will avoid fixed costs of $5,880, and it will be able to lease the...
X Company currently makes a part and is considering buying it next year from a company that has offered to supply it for $17.56 per unit. This year, total costs to produce 58,000 units were: Direct materials $377,000 Direct labor 301,600 Variable overhead 237,800 Fixed overhead 69,600 If X Company buys the part, it can avoid $24,360 of the fixed overhead. The resources that will become idle if they choose to buy the part can be used to increase production...
X Company currently makes a part and is considering buying it next year from a company that has offered to supply it for $16.11 per unit. This year, total costs to produce 60,000 units were Direct materials Direct labor Variable overhead Fixed overhead $348,000 312,000 192,000 90,000 If X Company buys the part, it can avoid $21,600 of the fixed overhead. The resources that will become idle if they choose to buy the part can be used to increase production...
X Company currently makes a part and is considering buying it next year from a company that has offered to supply it for $17.15 per unit. This year, total costs to produce 58,000 units were: Direct materials $400,200 Direct labor 232,000 Variable overhead 261,000 Fixed overhead 87,000 If X Company buys the part, it can avoid $28,710 of the fixed overhead. The resources that will become idle if they choose to buy the part can be used to increase production...
X Company is considering buying a part next year that they currently make. A company has offered to supply this part for $14.74 per unit. This year's total production costs for 55,000 units were: Materials $335,500 Direct labor [all variable] 231,000 Total overhead 192,500 Total production costs $759,000 Of the total overhead costs, $55,000 were fixed, and $42,350 of these fixed overhead costs were unavoidable. If X Company buys the part, the resources that were used for production can be...
X Company is considering buying a part in 2020 that it made in 2019. For 2020, the budgeted production cost function is $10.35X + $11,700, where X is the number of units produced. A company has offered to supply this part to X Company for $13.55 per unit. If X Company accepts the offer, it will still incur fixed costs of $5,499, and it will not be able to do anything with the resources that were used to produce the...
X Company is considering buying a part in 2020 that it made in 2019. For 2020, the budgeted production cost function is $10.21X + $11,550, where X is the number of units produced. A company has offered to supply this part to X Company for $13.45 per unit. If X Company accepts the offer, it will still incur fixed costs of $5,198, and it will not be able to do anything with the resources that were used to produce the...
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 $16.49 per unit. Budgeted production in 2020 is 50,000 units, and budgeted per-unit production costs are: Materials Direct labor (all variable] Total overhead Total $5.50 6.00 4.90 $16.40 $95,000 of X Company's total overhead costs are fixed; $58,900 of the $95,000 are unavoidable even if it buys the part. Also, if X...