X company is considering buying a part next year that they

Reference no: EM13577337

X Company is considering buying a part next year that they currently make. A company has offered to supply this part for $11.23 per unit. X Company would have to inspect each part at a cost of $0.49 per unit. This year's production costs for 8,100 units of this part were:

	Total	Per-Unit
Materials	$26,163	$3.23
Direct labor	29,484	3.64
Variable overhead	24,867	3.07
Fixed overhead	26,163	3.23

If X Company buys the part, $11,773 of the fixed overhead is avoidable; the rest is common and cannot be avoided. In addition, if X Company buys the part, it can rent out the facilities that it currently uses to make the part and receive $12,200. Estimated production next year is expected to be the same as last year.

1) If X Company buys the part, it will save?

2) X Company is concerned that next year's sales may be different than this year's sales. At what level of demand will X Company be indifferent between making and buying?

Reference no: EM13577337

Questions Cloud

Daniel is considering selling two stocks that have not : daniel is considering selling two stocks that have not fared well over recent years. a friend recently informed daniel

Lt x be a continuous random variable with density fxs : let x be a continuous random variable with density fxs ks-6 for s 1 and fxs 0 for sa determine the value of the

On january 1 2011 pacer company paid 1920000 for 60000 : on january 1 2011 pacer company paid 1920000 for 60000 shares of lennon co.s voting common stock which represents a 45

For the year ended june 30 2011 northern clothing company : for the year ended june 30 2011 northern clothing company has total assets of 81197417 roa of 9.84 percent roe of 18.74

X company is considering buying a part next year that they : x company is considering buying a part next year that they currently make. a company has offered to supply this part

Peoria corp just complete another successful year as : peoria corp. just complete another successful year as indicated by the following income statement. prepare a statement

If the actual mean weight is as low as 151 kg what is the : the mean weight of penguins last year was 15.4 kg. in a random sample of 35 penguins the standard deviation of the

Preston concrete is a major supplier of concrete to : preston concrete is a major supplier of concrete to residential and commercial builders in the pacific northwest. the

In a data communication system several messages that arrive : in a data communication system several messages that arrive at a node are bundled into a packet before they are

User Account

All Pages