Marigold Company is currently purchasing a component for $15 but is considering making the part internally. The plant engineer has suggested two alternatives. The first alternative would increase fixed costs by $11,800 per month and incur variable costs of $11 per part. The second alternative would increase fixed costs by $18,500 and incur variable costs of $9 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

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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

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At a level of output of 3,150 units, which alternative is most profitable? Alternative 1Alternative 2