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Question: X Company currently makes 2,700 units of a unique part for one of its finished products . Variable production costs for this part are $ 13.93 per unit ; fixed costs associated with this part are 13,000 per year
A company has offered to supply X Company with the part for a price of $ 15.50 per unit . For X Company , the bad news is that it will have to inspect the parts upon arrival , requiring rental of a special machine for 2,000 per year and per - unit inspection costs of $3.20 . The good news is that if it buys the part , not only can it avoid all of the fixed costs associated with the production of the part , but it can use the released production facilities to generate 13,000 per year .
At what production level would X Company be indifferent between making the part and buying it?
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