Reference no: EM132760927

Weston Corporation currently makes Part #500, used in its manufacturing of engines. At 15,000 units, the total cost of making Part #500 is $129,000, computed as follows: Direct Labor = $30,000 ($2 per unit) Direct Materials = $60,000 ($4 per unit) Variable Overhead = $24,000 ($1.60 per unit) Fixed Overhead = $15,000 An outside vendor has offered to supply Weston with 15,000 units of Part #500 for $115,000. If the company accepts the offer, its fixed overhead costs will be reduced by $6,000.

Problem 1. If Weston buys the parts instead of continuing to manufacture them, the company will save $_______________.

Problem 2. At a total purchase price of $_________________, the company would be indifferent between making or buying 15,000 units of the part. (Hint: The amount must be more than the current purchase price of $115,000.)