Production of a new small appliance

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Reference no: EM132077590

A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $7 each or to produce them in-house. Either of two processes could be used for in-house production; one would have an annual fixed cost of $164,070 and a variable cost of $5 per unit, and the other would have an annual fixed cost of $197,038 and a variable cost of $4 per unit. Determine the range of annual volume for which each of the alternatives would be best. (Round your answer to the nearest whole number.) For annual volume less than ______ (production in house at $4 per unit /production in house at $5 per unit/ puchase from the vendor) is best. For larger quantities, best to produce in house at $____ per unit.

Reference no: EM132077590

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