The firm Bombadil & Co. provides financial consultations and must decide whether to accept a supplier's offer to sell the firm an essential input: consultant hours. This supplier is willing to supply the input for $110 per hour. Bombadil & Co. requires 500 units of consultant hours every month.

Currently Bombadil & Co. produces consultant hours with its own equipment and labor. The equipment is leased for $50,000 per month, and labor salaries are $17,000 per month. Also about $2,000 of other costs per month are incurred by producing the input.

If the firm buys the part, all costs of making the input can be avoided.

Bombadil & Co. is pursuing a differentiation strategy.

Buying the product from a supplier limits the control Bombadil & Co. has over the quality of its financial consultations.

Group of answer choices

Even though relevant cost analysis suggests it is $14,000 LESS profitable to buy this input than to make it, strategic cost analysis suggests the firm should buy the product.

Relevant cost analysis suggests it is $14,000 LESS profitable to buy this input than to make it, and strategic cost analysis also suggests the firm should make the product.

Relevant cost analysis suggests it is $14,000 MORE profitable to buy this input than to make it, and strategic cost analysis also suggests the firm should buy the product.

Even though relevant cost analysis suggests it is $14,000 MORE profitable to buy this input than to make it, strategic cost analysis suggests the firm should make the product.