Make or Buy:

Vista company manufactures electronic equipment. In 2015, it purchased from an outside supplier the special switches used in each of its products. The supplier charged Vista $2 per switch. AS an alternative, Vista's CEO considered purchasing either Machine A or Machine B so the company could manufacture its own switches. The CEO decided at the beginning of 2016 to purchase Machine A, based on the following data:

	Machine A	Machine B
Annual fixed cost (depreciation)	$135000	$204000
Variable cost per switch	.65	.30

1) Assume that machine A has already been purchased. Is it preferable to use machine A to make the switches or to purchase the switches from an external supplier?

2) At what volume level should Vista consider replacing Machine A with Machine B?