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Please only answer the difference. A, B, C, or D. All other answers are correct. The ABC Company had two options for sourcing molded plastic
Please only answer the difference. A, B, C, or D. All other answers are correct.
The ABC Company had two options for sourcing molded plastic parts, and these options are presented in the table below. Now, the ABC Company has identified another potential supplier for the molded plastic parts. The new supplier has bid $0.1100 per part but also will impose a shipping and handling charge of $0.0100 per unit. Additional inventory handling charges should amount to $0.0010 per unit. Finally, purchasing costs are estimated at $20 per month for the length of the 36 month contract. Note that the forecasted demand is a total of 1 million units over the 36 months. Click the icon to view the total cost analysis for the sourcing decision at ABC. a. The total cost per unit for the new supplier is $ (Enter your response rounded to four decimal places.) The outsourcing option with the new supplier is than insourcing. b. Suppose the three-year volume is expected to rise to 1.5 million, rather than 1 million, molded plastic parts. The total cost per unit associated with insourcing is now g (Enter your responses rounded to four decimal places.) What explains the difference? A. The difference in cost per unit is explained only by the larger volume absorbing the fixed "engineering/design costs." B. The difference in cost per unit is explained only by the larger volume absorbing the fixed "equipment depreciation." C. The difference in cost per unit is explained by the larger volume absorbing the fixed "equipment depreciation" and "engineering/design costs." D. None of the aboveStep by Step Solution
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