X Company is considering buying a part next year that they currently produce. A

Question

X Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $16.93 per unit. This year's per-unit production costs for 57,000 units of this part were:

Of the total fixed overhead costs, $108,300 were fixed, and $84,474 of these fixed overhead costs are unavoidable. If X Company buys the part, the resources that were used for production can be rented to another company for $75000. Production next year is expected to decrease to 61,450 units.

4. If X Company buys the part instead of making it, it will save?

Please need help!!! show your work and give me correct answer plz

Explanation / Answer

Details Amount Total unavoidable Cost        84,474.00 Cost of Prcouring from Outside (61450)*16.93 10,40,348.50 Less Rentals from Unused equipment       -75,000.00 Total cost of procuring from outside 10,49,822.50 Details Amount Avoidable Cost Direct Material 61450*5.80     3,56,410.00 Direct Labor     3,25,685.00 Total Overhead (57000*6.20-(108300-84474)     3,29,574.00 10,11,669.00 Net Loss from Procuring Outside        38,153.50 Outsourcing is costlier.

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