Question
1) A global manufacturer of air conditioning units (ACUs) is considering outsourcing the manufacturing of a fan used in the manufacturing of units. The company
1) A global manufacturer of air conditioning units (ACUs) is considering outsourcing the manufacturing of a fan used in the manufacturing of units. The company estimates that the annual fixed cost of manufacturing the part in-house, which includes equipment, maintenance, and management, amounts to $9 million. The variable cost of labor and materials are $12.00 per breaker. The company has an offer from a major subcontractor to produce the part for $17.00 per fan. The company should consume more than ________ fans per year to make the manufacturing the part in-house option the least costly. (Enter your response rounded to the nearest whole number.)
2) Brutus Couture purchases denim jean jackets from a manufacturer oversees. The current purchase price is $9.93 per unit. Efforts to improve quality has prompted sourcing to consider making the jackets in-house. Annual sales should increase from 150,000 to 600,000 units. Fixed costs would increase by about $1,125,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $2 per unit, and labor costs would be $3 per unit produced. What is the break-even quantity? _________ units (Enter your response rounded to the nearest whole number.)
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