USA Determining Should the company purchase Part X or continue to produce it? Support your answer with the necessary calculations.

Dec 5, 2020
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United States
I am an employee and he asked me to find
Al-Tadamun Company produces Part (S), and the number of units produced from it last year was 5,000 units, and the unit cost for this part was as follows: direct materials $ 25, direct labor $ 20, variable industrial costs $ 10, fixed industrial costs $ 20, costs Administrative variable, $ 2.
The company now has an opportunity to purchase this part at a price of $ 70 per unit, and the company expects that it will need 6,000 units during the next year, and that the cost of direct materials and direct labor will increase by 10%, and other costs will remain unchanged. Also, 70% of the fixed industrial costs will remain the same in the case of purchase and the remaining 30% can be avoided, and there is no other alternative in which unused energy can be used in its production instead of producing part (x) if it is purchased.

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