x Company currently makes a part and is considering buying it next year from a c

Question

x Company currently makes a part and is considering buying it next year from a company that has offered to supply it for $15.76 per unit. This year, total costs to produce 56,000 units were Direct materials Direct labor Overhead $375,200 274,400 212,800 Of the overhead costs, $72,800 were fixed, and $45,136 of these fixed overhead costs are unavoidable even if X Company buys the part. Production next year is not expected to change. If X Company continues to make the part instead of buying it, it will save Submit Answer Tries 0/s

Explanation / Answer

Make Amt Buy Amt Direct Material 375200 Cost of Purchase (56000 x 15.76) 882560 Direct Labor 274400 Relevant Overhead (212800-45136) 167664 Total Cost 817264 882560 Savings (882560-817264) 65296

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