Company is considering buying a part next year that they currently produce. A company has offered to supply this part for $17.13 per unit. This year’s production costs for 84,000 units of this part were: Cost Item Total Per-Unit Materials $487,200 $5.80 Direct labor 504,000 6.00 Total overhead 495,600 5.90 Of the total overhead costs, $168,000 were fixed,
and of the total fixed overhead costs, $62,160 were directly related to the part and could be avoided if the part was bought instead of made. Production next year is expected to increase to 87,900 units. If X Company buys the part, it use its idle resources to save $7,000 per year. 3. If X Company continues to make the part instead of buying it, it will save
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