Meta Suppose that a manufacturer needs to produce a custom aluminum housing for a special customer order. Because it currently does not have the equipment necessary to make the housing, it would have to acquire machines and tooling at a fixed cost (net of salvage value after the project is completed) of $250,000.  The variable cost of production is estimated to be $10 per unit. The company can outsource the housing to a metal fabricator at a cost of $35 per unit. The customer order is for 12,000 units. What should they do?

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Answer To determine the most costeffective option we can compare the cost of producing the custom aluminum housing inhouse with the cost of outsourcing it to a metal fabricator Option 1 InHouse Produc... View the full answer