A Manufacturing Company Needs to Know Whether to Make In-House

question 58

Multiple Choice

A manufacturing company needs to know whether to make in-house or buy a roller gear assembly for its production of a new fax machine. The company expects to produce 9,000 units per year. The following estimates have been made:
$\begin{array}{|l|c|c|}\hline & \text { Make } & \text { Buy } \\\hline \text { Fixed cost per year } & \$ 8,000 & \$ 0 \\\hline \text { Variable cost per part } & \$ 5.45 & \$ 6.93 \\\hline\end{array}$
-The volume they are indifferent regarding the decision to make or buy is _____ units.

• A) less than or equal to 2,000
• B) more than 2,000 but less than or equal to 4,000
• C) more than 4,000 but less than or equal to 6,000
• D) more than 6,000 but less than or equal to 8,000