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Manufacturing the part in-house or outsourcing it

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

Annual fixed cost = $80,000

Variable cost per part= $140

For purchase from supplier:

Purchase price per part= $160

a. Using the information, find the best decision if the demand is 5,000 parts.

b. Determine the break-even quantity at which the firm would be indifferent between manufacturing the part in-house or outsourcing it.

Reference no: EM132168408

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