Sandhill normally produces video games which it sells in the video game stores. The cost to produce a video game includes $$22\mathrm{.}80$ unit

variable cost and $$7\mathrm{.}80$ unit fixed cost. The average price of a video game is $$75\mathrm{.}20.$ Sandhill has been approached by an outside

vendor who has proposed to digitize the video games for Sandhill which can then sell the video games directly to players as a

downloadable option. Using the following independent assumptions, apply the insource versus outsource decision$-$making process to

determine if Sandhill should continue to make its video games or outsource for a digitized version.

$($a$)$

Your answer is partially correct.

Sandhill can purchase a digitized version of each video game, the price being offered by the outside vendor will be $$18\mathrm{.}80,$ with

Sandhill still incurring $$8\mathrm{.}90$ of unit variable cost for game design and $$3\mathrm{.}90$ of unit fixed cost. Although, this means of providing

video gaming is trending, should Sandhill continue to make traditional video games or purchase a digitized version to sell? $($Round

answers to $2$ decimal places, e$.$g$.75\mathrm{.}25.)$

Sandhill should