Forecast level would you be neutral to make-buy decision

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Reference no: EM131081500

You can buy product X from company ABC for $33/piece. Alternatively, you can make product X in-house. You would have to purchase a small building at $200,000, purchase two machines at $40,000 and $28,000, and hire two operators for the machines. Direct labor cost is $26/hour (for both operators), and purchasing raw materials at $1.75/unit of product X. At a unit sale price of $40/unit, should you buy or make if you forecast sales of product X to be 45,000 units/year? What if the forecast is changed to 55,000 units/year? At what forecast level would you be neutral to the make-buy decision?

Reference no: EM131081500

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