Question

Name: Questions 1 and 2 refer to the following information ant it made in 2019. For 2020, the budgeted production cost function is funits produced. A company has offered to supply this part to X Company for offer, it will avoid fixed costs of $6,996, but it will not be able to do anything the part. In 2019, 3,300 units of the part were produced; in 2020, 3.600 units costs of $6.90 od to supp X Company is considering buying a part in 2020 that it med $10.24x + $13,200, where X is the number of units prod $13.66 per unit. If X Company accepts the offer, it wi with the resources that were used to produce the part. Im art. In 2019,3 will be needed 8 pt. If X Company makes the part in 2020 instead of buying it, it 1. AO $2,722 BO $3,402 CO 84,253 DO 85.316 stead of buying it, it will save DO $5,316 EO $6,645 FO $8,306 CO $4,253 level would X Company be indifferent between making and buying the part in 2020? 8 pt 2. At what production level would X Company be in 2. A 1.110 BO 1,255 CO 1,418 DO 1,602 EO 1,810 FO 2.046 Questions 3 and 4 refer to the following information: rimer buying a part in 2020 that it has been making for the past several years. A company has offered X Company is considering buying a part in 2020 that it has been mal 15 15 per unit. Budgeted production in 2020 is 52,000 units, and budgeted per-unit production costs to supply this part for $15.15 per unit. Budgeted production in : are: Materials 86.00 Direct labor all variable] 4.20 Total overhead 4.80 Total $15.00 $93.600 of X Company's total overhead costs are fixed: S60,840 of the $93,600 are unavoidable even if it buys the part. Also, if X Company buys the part, it can rent the equipment that was used to make the part to another company for $70,000. 8 pts. If X Company buys the part instead of making it, it will save 3. AO $1,360 BO $1,700 CO $2,125 DO 82,656 EO 83,320 FO 84,150 8 pt. At what production level would X company be indifferent between making and buying the part?! 4. AO 24,036 BO 28,122 CO 32,903 DO 38,496 EO 15,011 FO 52,697

Answer 1

(1): The answer is option “D” $5,316

Explanation: Relevant costs to make 3600 units in 2020 = (10.24*3600) + 6996 = $43860

Cost of buying = 13.66*3600 = $49176

Thus savings = 49,176 – 43,860 = $5,316

(2): The answer is option “F” 2,046

Let the product level be “x”. Thus 10.24x + 6996 = 13.66x

Or x = 6996/(13.66 – 10.24) = 2,046 units