Firm is evaluating the alternative of manufacturing part

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Reference no: EM132222949

A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below:

For in-house manufacturing:

Annual fixed cost = $75,000

Variable cost per part = $140

For purchasing from supplier:

Purchase price per part = $150

Using this information, find the best decision if the demand is 6,500 parts. Round your answers to the nearest dollar.

Total cost of production: $

Total cost of outsourcing: $

The best decision is to -Select-manufacture in-house out source Item 3 .

Determine the break-even quantity at which the firm would be indifferent between manufacturing the part in-house or outsourcing it. Round your answer to the nearest whole number.

Reference no: EM132222949

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