A firms manager must decide whether to make or buy a certain item used in the production

Question:

A firm’s manager must decide whether to make or buy a certain item used in the production of vending machines. Making the item would involve annual lease costs of $150,000. Cost and volume estimates are as follows:

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a. Given these numbers, should the firm buy or make this item?

b. There is a possibility that volume could change in the future. At what volume would the manager be indifferent between making and buying?

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Operations Management

ISBN: 9781260575712

14th International Edition

Authors: William J Stevenson

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Question Posted: Feb 27, 2024 03:04 AM

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A firms manager must decide whether to make or buy a certain item used in the production

Question:

Annual fixed cost Variable cost/unit Annual volume (units) Make $150,000 $ 60 12,000 Buy None $ 80 12,000

Step by Step Answer:

a Determine the annual cost of each alternative Total cost Fixed cost Volume Variable cos...View the full answer

Operations Management

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