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Business, 15.04.2020 00:37 log40

Currently, you make one of the components needed for final assembly of your product and you are considering buying the part from an outside supplier. You currently make the part on equipment that you have had for a number of years (but still runs fine) at a cost of $75,000 per year and a variable cost of $25.00 pre unit. The outside supplier that you found can make the part for $17.00 per unit, but you will have to pay some of their annual fixed costs of $220,000.
Required:
1. What is the break-even quantity (or indifference point) between buying and making? (Calculate by hand or all in Excel?)
2. What is the total cost to make a quantity of 28,000 units per year?
3. What is the total cost to buy a quantity of 28,000 units per year?
4. What does the company save for the year by selecting the low-cost option at an annual requirement of 28,000 units?

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