Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Part C please Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,350 per
Part C please
Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,350 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 150 to 700 units. Management wonders whether it is time to make the component in-house, rather than to continue buying it from the supplier. Fixed costs would increase by about $30,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $900 per unit, and labor costs would be $350 per unit produced. a. Should Hahn make rather than buy? Hahn should the components, saving \& per year as compared to the other decision. (Enter your response rounded to the nearest whole number.) b. What is the break-even quantity? The break-even quantity is units. (Enter your response rounded to the nearest whole number.) c. What other considerations might be important? Since Hahn would be ordering 700 units instead of 150 , they can count on a discount from the supplier. The discount of at least $ would make the "buy" decision better than the "make" alternative. (Enter your response rounded up to the next whole number.)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started