Make option using the semiautomatic lathe

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Reference no: EM131759397

Suppose that a manufacturer has identified the following options for obtaining a machined part. It can buy the part at $200 per unit (including materials); it can make the part on a numerically controlled semiautomatic lathe at $75 per unit (including materials); or it can make the part on a machine center at $15 per unit (including materials). There is negligible fixed cost if the item is purchased; a semiautomatic lathe costs $80,000; and a machining center costs $200,000.

The housing is sold at $300 per unit.

1. At Q=10,000 what is the total profit for the Make option using the semiautomatic lathe? ________

2. If the housing is sold by the manufacturer at $200 per unit instead of the original price of $300, how much is the PER UNIT contribution margin for the Make option using the semiautomatic lathe? _____

3. If the housing is sold by the manufacturer at $200 per unit instead of the original price of $300, what is the breakeven quantity for the Make option using the semiautomatic lathe? _____

Reference no: EM131759397

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