Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A firm currently buys an important input at a cost of $41 per input unit. Each finished good unit requires 1 input unit. Alternatively, the

A firm currently buys an important input at a cost of $41 per input unit. Each finished good unit requires 1 input unit.

Alternatively, the firm could use 1,500 square feet of factory space to make the input (those 1,500 square feet of factory space are currently leased to another firm for $87,950 per period). To make the input, the firm would need to acquire equipment at a cost of $95,554 per period and labor at a cost of $57,879 per period.

Making the product in-house will probably increase the quality of the product, thus increasing the sales price by 6%. Currently, each finished goods unit is sold for $179, and the firm produces and sells 5,000 of those finished goods units per period.

How much more (or less) profitable is it to make than to buy?

(Your answer will be a negative number if it is less profitable to buy than to make.)

Round your final answer to whole dollars. Enter your answer as a whole number without dollar signs, commas, or decimals.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Towards A Strategic Human Resource Management Roles Of HR Audit And Org Culture

Authors: Adel Al Samman

1st Edition

3330653051, 978-3330653054

More Books

Students also viewed these Accounting questions