Currently, you are purchasing smartphones from a supplier at a cost of $1,000 per unit.You are contemplating producing smartphones in-house.Manufacturing smartphones in-house is subject to economies of scale.In particular, the learning curve applies to the labor content in manufacturing the product. As such, the average cost to manufacture smartphones decreases as the number of units produced (Q) increases.

In order to assist you in making a choice between buying smartphones from a supplier or making smartphones in house, develop a template using Excel for evaluating the total costs, as well as average cost, for the Buy and Produce options under varying levels of annual demand (Q) for smartphones.

Additional information (inputs to your comparative analysis) for the Produce option is as follows:

Setup Cost:$2,000

The Material Cost per Unit: $250

Labor Hours to Produce the First Unit: 9 hours

Learning Percentage: 90%

Labor Cost (including benefits) per Hour: $80

Overhead Cost: 20% of labor, material, and fixed cost

Purchase cost per unit$1000

1.Show an X,Y scatter graph for the Make Option. The X-axis of the graph is Q (quantity produced). The Y-axis should only include the total setup cost, total labor cost, total material cost, total overhead cost, and total cost. Name and label the graph completely and clearly. Be sure that anyone reading this graph will know what each of the graph components means (i.e. use appropriate graph labels and titles).

2.Show and X,Y scatter graph comparing the average cost per unit of making smartphones in-house and the average cost per unit of the smartphones if purchased from the supplier.

3.What is the indifference point between the two (Make or Buy) options?