Question: Fast Finish, Inc. (FFI) has made a technological break- through in snow board finish application. FFI will apply the fin- ish for $0.23 per unit

Fast Finish, Inc. (FFI) has made a technological break- through in snow board finish application. FFI will apply the fin- ish for $0.23 per unit in variable costs plus a fixed annual cost of $230,000. Use the cost and demand information given in Prob- lem 3 for Downhill Boards to evaluate this proposal.

(a) What will it cost Downhill Boards to outsource the fin- ishing process?

(b) At what demand level does it make sense economically to outsource the finishing process?

(c) What additional factors should be considered when making this outsourcing decision?

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