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X Company is somewhat uncertain how many units of the part it will need next year. How many units would make the company indifferent between continuing to buy the part and making it?
X Company currently buys a part from a supplier for $13.99 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part. Estimated costs to make the part are: Per-Unit TotalDirect materials $3.72 $11,904Direct labor 4.09 13,088Variable overhead 4.10 13,120Fixed overhead 5.60 17,920Total $17.51 $56,032 Of the estimated fixed overhead, 56,989 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused factory space to a tenant for $2,900; it will have to use thisspace to make the part.
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