Solution-At what production level would x company be

At what production level would x company be indifferent

Reference no: EM132754995

Question: X Company currently makes 2,300 units of a unique part for one of its finished products. Variable production costs for this part are $12.76 per unit; fixed costs associated with this part are $18,000 per year.

A company has offered to supply X Company with the part for a price of $15.60 per unit. For X Company, the bad news is that it will have to inspect the parts upon arrival, requiring rental of a special machine for $3,400 per year and per-unit inspection costs of $3.30. The good news is that if it buys the part, not only can it avoid all of the fixed costs associated with the production of the part, but it can use the released production facilities to generate $13,000 per year.

At what production level would X Company be indifferent between making the part and buying it?

Reference no: EM132754995

Questions Cloud

What the journal entry when the bonds are sold is : A company issues $60 million of bonds at par on January 1, 2020. The bonds pay 10% interest semi-annually on 12/31 and 6/30 and mature in 20 years.

How much additional debt must the firm issue : You are a financial manager at ABC Corp. and are trying to assess the following project. The project will require a $250 million initial investment.

Access community peer or mentor : Include any contact details, protocols or rules you need to follow to access this community peer or mentor.

Contrast the views of aristotle and descartes : For literally thousands of years, people have discussed the answers to questions about reality and the nature of being. The 350 years surveyed thus far in this

At what production level would x company be indifferent : X Company currently makes 2,300 units of a unique part for one of its finished products. Variable production costs for this part are $12.76 per unit.

What is impact of this transaction on net operating income : The cost of the goods sold is $7000. The credit card company charges a 5% fee. What is the impact of this transaction on net operating income

Describe cultural and situational factors : Describe cultural and situational factors that influence hunger. How do these differ from physiological factors that produce hunger?

What problems do you see with the income statement : Albert owns a sports equipment store. Having little knowledge of accounting, he has hired Frank to keep the accounting records of the business.

What will the price earnings ratio of the combined entity be : Caren Ltd has earnings of $200,000, has 150,000 shares on issue, and the shares are priced at $10 per share. Denise Ltd has earnings of$120,000.

User Account

All Pages

At what production level would x company be indifferent

Reference no: EM132754995

Reference no: EM132754995

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

How much control does fed have over this longer real rate

Coures:- fundamental accounting principles

Accounting problems

Theory of interest - term structure of interest rates

Write a report on internal controls

Prepare the bank reconciliation for company

Cost-benefit analysis

Theory of interest

Liquidity and profitability

What is the expected risk premium on the portfolio

Simple interest and compound interest

Capm and venture capital

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT