Calista Company manufactures electronic equipment In 2009, it purchased the special switches used in each of its products from an outside supplier. The supplier charged Calista $2 per switch. Calista€™s CEO considered purchasing either machine X or machine Y so the company could manufacture its own switches. The CEO decided at the beginning of 2010 to purchase Machine X, based on the following data:

Required
1. For machine X, what is the indifference point between purchasing the machine and purchasing from the outside vendor?
2. At what volume level should Calista consider purchasing MachineY?

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Annual fixed cost Variable cost per switch Machine X $135,000 0.65 Machine Y S204,000 0.30