A firm plans to begin production of a new small appliance. There are three alternatives available. First, the manager must decide whether to purchase the motors for the appliance from a vendor at $8.50 each or produce them in-house Either of two processes can be used for in-house production Process A would have an annual fixed cost of $200,000 and variable cost of $6 per unit, and Process B would have annual fixed cost of $300,000 and variable cost of $4 per unit Note that purchasing from a vendor does not involve fixed costs. Required: [Show the supporting (sufficient/adequate work) computations in all cases to earn full credit] Which of the two processes (in-house production) would you recommend if the firm needs 50,000 motors? (5 points) a If the firm needs 70,000 motors during the year, should it produce them in-house (Process A or Process B) or acquire them from the vendor? Show your work clearly to earn full credit. (7) C Without sketching any graph, just by observation and using the responses for a and b above, specify when either Process A or Process B should be used. (2) b

A firtn plans to begin production of a new smoll opplavice. There are three allematrves avalable. First, the manager must decide whelher to purchase the motors for the appliance from a vendor at $5.50 each or produce them in house Either of two processes can be used for in house production Process A would have an annual txed cost of $200,000 and vanable cost of $0 per unt and Process B would hwe annud foxed cost of $900,000 and vonable cost of $4 per unt Note that purchasing from a vendor does not involve fixed costs. Required: [Show the supporting (sufficient/adequate work) computations in all cases to earn full credit] a. Which of the two processes (in house production) would you recommend if the firm needs 50,000 molors? (5 pants) dearly beam full credit (T) c. Whoul welching any graph, pust by observation and using the responses lor a and b above, specty when ether Process A or Procuss B should be used