=+3 The sales manager is concerned that the estimate of 5000 units may be high and believes that only 3200 units will be sold.

Production will be cut back, freeing up work space. This space can be used to add a light and horn whether Scoot Ltd buys the motors or makes them in-house. At this lower level of production and sales, Scoot Ltd will produce the motors in 8 batches of 400 units each. On the basis of financial considerations alone, should Scoot Ltd purchase the motors from the outside vendor?

Show your calculations.