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

Question

pt X Company is considering buying a part next year that they currently make. A company has offered to supply this part or S16.96 per unit. This year's total production costs for 58,000 units were: Materials Direct labor (all variable Total overhead Total production costs $400,200 295,800 284,200 8980,200 Of the total overhead costs, $104,400 were fixed, and $75,168 of these fixed overhead costs were unavoidable. If x Company buys the part, the resources that were used for production can be rented out for $80,000. Production next year is expected to increase to 62,800 units. If X Company continues to make the part instead of buying it, it will save 4. AO $1,820 B?$2,421 CO S3,220 DO s4,283 EOss,696 FOS7,576 0-20 10 .. 10 20 30

Explanation / Answer

it will save = (1057512-1065088) = 7576

so answer is f) $7576

Make Buy Direct material 433320 Direct labour 320280 Variable manufacturing overhead 194680 Fixed manufacturing overhead 29232 Opportunity cost 80000 Purchase cost 1065088 Total 1057512 1065088

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