X Company is considering buying a part next year that it
currently makes. A company has offered to supply this part for
$17.18 per unit. This year's total production costs for 57,000
units were:
Materials $387,600
Direct labor 285,000
Total overhead 290,700
$205,200 of X Company's total overhead costs were variable;
$24,795 of X Company's fixed overhead costs can be avoided if it
buys the part. If X Company buys the part, there are no alternative
uses of the resources...