Business, 22.11.2019 07:31 jetblackcap

Outsourcing (make-or-buy) decision mountain air limited manufactures a line of room air purifiers. management is currently evaluating the possible production of an air purifier for automobiles. based on an annual volume of 10,000 units, the predicted cost per unit of an auto air purifier follows. $.00 1.40 10.00 total $20.40 these cost predictions include $80,000 in fixed factory overhead averaged over 10,000 units. the completed air purifier units include a battery-operated electric motor, which mountain air assembles with parts purchased from an outside vendor for $2.00 per motor. mini motor company has offered to supply an assembled battery-operated motor at a cost of $5.50 per unit, with a minimum an- nual order of 5,000 units. if mountain air accepts this offer, it will be able to reduce the variable labor and variable overhead costs of the auto air purifier by 50 percent. required determine whether mountain air should continue to make the electric motor or outsource it from mini motor company. (hint: analyze the relevant costs of making the "motors," not the entire air purifier.)a. determine whether mountain air should continue to make the electric motor or outsource itfrom mini motor company. (hint: analyze the relevant costs of making the "motors," not theentire air purifier.)b. if it could otherwise rent the motor-assembly space for $20,000 per year, should it make oroutsource this component? c. what additional factors should it consider in deciding whether to make or outsource the elec-tric motors? , show calculations

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Outsourcing (make-or-buy) decision mountain air limited manufactures a line of room air purifiers. m...

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