What is the maximum purchase price

Reference no: EM131821585

Question: Ms. Jane Kim, Purchasing Manager of Kuantan ATV, Inc., is negotiating a contract to buy 20,000 units of a common component part from a supplier. Ms. Kim has done a preliminary cost analysis on manufacturing the part in-house and concluded that she would need to invest $50,000 in capital equipment and incur a variable cost of $25 per unit to manufacture the part in-house. Assuming the total fixed cost to draft a contract with her supplier is $1,000, what is the maximum purchase price that she should negotiate with her supplier? What other factors should she negotiate with the suppliers?

Reference no: EM131821585

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