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Thermal Mugs, Inc., manufactures varlous types of leak-proof personal drink carriers. Thermal's T6 container, its most insulated carrier, maintains the temperature of the llquid inside
Thermal Mugs, Inc., manufactures varlous types of leak-proof personal drink carriers. Thermal's T6 container, its most insulated carrier, maintains the temperature of the llquid inside for 6 hours. Thermal has designed a new lid for the T6 carrier that allows for easier drinking and pouring. The cost to produce the new lid is $2.19; a) Plato Plastics has approached Thermal and offered to produce the 120,000 lids Thermal will require for current production levels of the T6 carrier, at a unit price of $1.75 each. Is this a good deal? Should Thermal buy the lids from Plato rather than produce them themselves? b) Suppose that, of the $0.51 in fixed costs per unit of the T6 lld, $0.12 of those fixed costs are assoelated with interest costs and insurance expenses and thus would be avoidable if the T6 lid is purchased externally rather than produced internally. How does that change the analysis
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