Company X produces a part that is used in the manufacture of one of its
products. The costs associated with the production of 15495 units of this
part are as follows:

Of the fixed factory overhead costs, $69040
is avoidable. Company Y has offered to sell 15495 units of the same
part to Company X for $36 per unit.

Assuming there is no other use for the
facilities, Company X should (round the final answer to the nearest unit):

Question

Company X produces a part that is used in the manufacture of one of its
products. The costs associated with the production of 15495 units of this
part are as follows:

Of the fixed factory overhead costs, $69040
is avoidable. Company Y has offered to sell 15495 units of the same
part to Company X for $36 per unit.

Assuming there is no other use for the
facilities, Company X should (round the final answer to the nearest unit):

Accepted Answer

make the part, as this would save $14 per unit

Answer

None of the others

Answer

buy the part, as this would save the company $339040

Answer

buy the part, as this would save $10 per unit

Answer

make the part, as this would save $10 per unit

Direct materials	$85000
Direct labor	125000
Variable factory overhead	60000
Fixed factory overhead	135000
Total costs	$405000

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