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

relevant cost of purchase production variable cost 11.1 purchase cost 16.93 0 no of units 61450 61450 total cost 1040349 682095 avoidable fixed cost -84474 0 variable overhead 264235 rent income -75000 Net cost 880874.5 946330 Savings if buy -65455.5

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