Question
Tyler is considering a make-or-buy decision for a required input to his manufacturing process. He wants to know which choice makes more sense depending on
Tyler is considering a make-or-buy decision for a required input to his manufacturing process. He wants to know which choice makes more sense depending on the units he makes per year as well as the cost of raw materials. Create 2-dimensional tables to compute the profitability of each option (revenue (fixed + variable costs)) for the next five years. Tables should consider raw material prices ranging from $6.50 to $7.50 in increments of $0.05 and yearly units ranging from 100,000 to 150,000 in increments of 5000. Other relevant data below:
Buying the parts would still require a slight increase in fixed expenses of $22,000 per year, but the main difference is that he would have to pay 125% of the cost of raw materials to purchase the parts. If he made the parts himself, his yearly fixed costs would be $200,000, but he would only have to pay for the raw materials for each part. Regardless of his choice, he plans on selling each unit made for $12.50. Use conditional formatting to highlight conditions where buying the parts is more profitable red and situations where making them is better green.
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