A Company Has Two Alternatives for Meeting a Customer Requirement

question 26

Multiple Choice

A company has two alternatives for meeting a customer requirement for 9,000 units of a specialty molding.If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit.If outsourced, the cost is $80 per unit.Determine the breakeven point and determine if they should make the item in-house or outsource it.

• A)breakeven point = 7,000 units; outsource
• B)breakeven point = 7,000 units; make in-house
• C)breakeven point = 11,667 units; outsource
• D)breakeven point = 11,667 units; make in-house

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Definitions:

Babbling

Early stage of language development in infants, characterized by the repetition of sounds and syllables without specific meaning.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving and creativity.

Anchoring

A cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions (the "anchor").

Adjustment Heuristic

A mental shortcut used to make decisions or judgments based on how easily an example, instance, or case comes to mind.