Given the Following Data for a Make-Or-Buy Decision What Would Be Your Cost Savings for the Preferred Alternative

question 65

Short Answer

Given the following data for a make-or-buy decision: $$\begin{array} { l l l } \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \\\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit }\end{array}$$ What would be your cost savings for the preferred alternative, for 32,000 units per year, compared to the other alternative?