Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I 1. Han manufacturing purchases a key component of one of its products from a local supplier. The current purchase price of the part is

I 1. Han manufacturing purchases a key component of one of its products from a local supplier. The current purchase price of the part is 1500 TL/unit. Efforts to standardize the parts worked well and they can use the same part for five different products. Management wonders whether it is time to make the part in-house now rather than buying from the supplier now. Fixed cost that they paid to the supplier annually was 10000 TL. If they make it in-house then the fixed cost will be 50000 TL. On the other hand the variable costs (raw material, overhead, labor) will be 1300 TL/unit. a) Represent the total cost of buying from supplier vs. in-house making on a two dimensional plot (where vertical axis is for total cost-horizontal axis is for quantity/volume produced) b) Find the break-even quantity that makes these two options (make in-house or buy from supplier) equal. Based on that provide the decision if the manufacturing company s production plans foresee total requirement of 750 units next year for this particular component

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

Managerial Accounting Working Papers

Authors: John G. Helmkamp

2nd Edition

0471514292, 978-0471514299

More Books

Students also viewed these Accounting questions

Question

7. What decisions would you make as the city manager?

Answered: 1 week ago

Question

8. How would you explain your decisions to the city council?

Answered: 1 week ago