Particular component to complete an order for distributor

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A computer manufacturer needs 7,500 units of a particular component to complete an order for a distributor. If done in-house, fixed cost would be $325,000 with variable cost at $25 per unit. Alternative two is to outsource for a total cost of $70 per unit with a setup/tooling cost of $50,000. The selling price for the item is $115. a. Graph the costs for each alternative. Graph profit for each alternative. b. Determine the breakeven quantity for each alternative. c. Determine the breakeven quantity between the two alternatives. d. For the current order, should they should make the item in house or outsource it? Over what range of quantities would it be optimal to outsource? to produce in house?

Reference no: EM13902354

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