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Exercise 4.36 Flounder Company is currently purchasing a component for $13 but is considering making the part internally. The plant engineer has suggested two alternatives.
Exercise 4.36 Flounder Company is currently purchasing a component for $13 but is considering making the part internally. The plant engineer has suggested two alternatives. The first alternative would increase fixed costs by $12,200 per month and incur variable costs of $9 per part. The second alternative would increase fixed costs by $19,500 and incur variable costs of $7 per part. What level of volume is necessary to justify making the part? (Round answers to 0 decimal places, e.g. 125.) Level of volume First alternatives units Second alternatives units LINK TO TEXT Over what relevant ranges of volume is each alternative optimal? 1. For demand under units, purchase the part 2. For demand between and units, adopt Alternative 1 3. For demand over units, adopt Alternative 2 At a level of output of 3,350 units, which alternative is most profitable? LINK TO TEXT
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