Plans to manufacture new line of notebook computers

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Reference no: EM132295130

Power Notebooks, Inc. plans to manufacture a new line of notebook computers. Management is trying to decide whether to purchase the LCD screens for the computers from an outside supplier or to manufacture the screens in-house. The screens cost $100 each from the outside supplier. To set up the assembly process required to produce the screens in-house would cost $100,000. The company could then produce each screen for $75.

a) Determine the number of units where the cost of buy or make is the same (indifferent point or break-even point).

b) If demand is below the break-even point, should the company make or buy the LCD screes?

c) if demand is above the break-even point, should the company make or buy the LCD screens?

d) What if the demand equals the break-even point?

Reference no: EM132295130

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