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A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below: For
A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below: For in-house manufacturing: Annual fixed cost =$90,000 Variable cost per part =$110 For purchasing from supplier: Purchase price per part =$130 a. If demand is forecast to be 5,500 parts, should the firm make the part in-house or purchase it from a supplier? Use the Break-Even Excel template. Round your answers to the nearest whole number. Total cost of production: $ Total cost of outsourcing: $ The best decision is to b. The marketing department forecasts that the upcoming year's demand will be 5,500 parts. A new supplier offers to make the parts for $128 each. Should the company accept the offer? Use the Break-Even Excel template. Round your answer to the nearest whole number. New total cost of outsourcing: $ The best decision is to C. What is the maximum price per part the manufacturer should be willing to pay to the supplier if the forecast is 5,500 parts? Round your answer to the nearest cent. $
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