Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mgt is considering an outsourcing decision (make/buy) for a part. The cost figures are as follows: Fixed costs = $300,000; Variable cost = $80/unit; Buy

Mgt is considering an outsourcing decision (make/buy) for a part. The cost figures are as follows: Fixed costs = $300,000; Variable cost = $80/unit; Buy cost = $90/unit landed (including frt and other costs). What's the break even demand quantity? (BEP = qty at which total cost to make = total cost to buy) Hint: TCMake = FC (fixed investment needed) + VC (variable cost/unit in house) * D (demand in units) TCBuy = C (Buy landed cost) * D BEP occurs at the qty at which TCB = TCM So find out the Demand (BEP qty) at which TCB=TCM C * D = FC + VC*D and solve for D (BEP qty)

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

The Lever Of Riches Technological Creativity And Economic Progress

Authors: Joel Mokyr

1st Edition

0195074777, 9780195074772

More Books

Students also viewed these Economics questions

Question

Why are inventories written down to the lower of cost or market?

Answered: 1 week ago

Question

5. Give some examples of hidden knowledge.

Answered: 1 week ago