You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15/ unit if you will pay their annual fixed costs of $200,000/year. The following table summarizes the details of this make versus buy decision. ALTERNATIVE Buy Make FIXED COST $200,000 per year $50,000 per year For what range of output would you prefer to make? O 1) 40,000 or more units per year O2) 0 - 40,000 units per year 3) 30,000 or more units per year VARIABLE COST $15 per unit $20 per unit O4) 0 - 30,000 units per year

You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the par for $15 / unit if you will pay their annual fixed costs of $200,000/ year. The following table summarizes the details of this make versus buy decision. For what range of output would you prefer to make? 1) 40,000 or more units per year 2) 040,000 units per year 3) 30,000 or more units per year 4) 030,000 units per year