Use This Scenario to Answer the Following Questions

question 63

Multiple Choice

Use this scenario to answer the following questions.
A company must decide if it will make or buy an item it needs. The company can make the item for $10 per unit, but must invest $15,000 in tooling to achieve that capability. Alex Rogo has quoted a total price of $12 per unit to supply the quantity required (assume their fixed costs are included in the quoted price) .
-Refer to the instruction above. Which alternative should be selected if annual requirements are 5,000 units?

• A) Make
• B) Buy
• C) Either Make or Buy; costs are the same for either option at 5,000 units.
• D) Can't be determined with information given