Use the following information to answer the questions below.

You currently make a part for old equipment at a cost of $40 / unit. The annual fixed cost for this equipment is $50,000. You have found an outside supplier who will make the part for $30 / unit if you will pay their annual fixed costs of $200,000 / year (see table).

ALTERNATIVE	FIXED COST	VARIABLE COST
Buy	$200,000 per year	$30 per unit
Make	$50,000 per year	$40 per unit

a) Refer to the instruction above. What is the break even quantity between buying and making? (8 marks)

b) Refer to the instruction above. What are total costs to buy an annual quantity of 40,000 units?

(3 marks)

c) Refer to the instruction above. What are total costs to make a quantity of 40,000 units per year? (3 marks)

d) Refer to the instruction above. For what range of output would you prefer to buy? (3 marks)

e) Refer to the instruction above. For what range of output would you prefer to make? (3 marks)

f) Refer to the instruction above. What does the company save for the year by selecting the low-cost option (for annual requirements of 40,000 units)?(5 marks)