Robust Ltd. is deciding between making and buying a component of its cars. The relevant cost to make a component of a car is $42 per unit + $50,000 in avoidable fixed costs per period. The relevant cost to buy this component from an external supplier is $50 per unit. If the firm buys from the supplier, they can lease out their facilities for $30,000 per period.

At what quantity of units would the firm be indifferent between making and buying

the component?

• 9,000 units
• 10,000 units
• 9,500 units
• 8,000 units

Please post full solutions. Thank you!

Robust Ltd. is deciding between making and buying a component of its cars. The relevant cost to make a component of a car is $42 per unit +$50,000 in avoidable fixed costs per period. The relevant cost to buy this component from an external supplier is $50 per unit. If the firm buys from the supplier, they can lease out their facilities for $30,000 per period. At what quantity of units would the firm be indifferent between making and buying the component? - 9,000 units - 10,000 units - 9,500 units - 8,000 units