Reference no: EM132694121

Problem 1: Given the current purchase price of $3000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $1200 per unit and an upfront fixed cost of $20,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is forecast to be only 10,000 units next year, then what will the maximum variable cost of making need to be in order for DBS to still consider making the components in-house; given an upfront fixed cost of $20,000,000 would still be needed and the supplier still charges $3000 per unit