Scenario 12.1 You Currently Make a Part on Old Equipment at a at a Cost

question 42

Multiple Choice

Scenario 12.1
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year. The following table summarizes the details of this make versus buy decision.

-Use Scenario 12.1 to answer the question. What are total costs to buy an annual quantity of 40,000 units?

• A) $400,000
• B) $500,000
• C) $800,000
• D) $850,000

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Definitions:

Heart Disease

A broad term for a range of diseases affecting the heart and blood vessels, including coronary artery disease, heart attacks, and heart failure.

Lower Cholesterol

The goal of reducing LDL (bad) cholesterol levels in the body to improve heart health.

Sedentary Lifestyle

A way of life that involves little to no physical activity, leading to potential health risks.

Breast Cancer

A type of cancer that develops from breast tissue.