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2. For this question, assume that if the chips are purchased outside, the facilities where the chips are currently made will be used to
2. For this question, assume that if the chips are purchased outside, the facilities where the chips are currently made will be used to upgrade the chips by increasing the memory capacity from 1 gigabyte to 10 gigabytes. As a consequence, the selling price of its MP3 players is expected to increase by $20. The variable cost per unit of the upgrade is anticipated to be $18, and additional tooling costs of $16,000 would be incurred. On the basis of financial considerations alone, should Nomad make or buy the chips, assuming that 10,000 units are produced (and sold)? Show your calculations.
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