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

question 11

Essay

A manufacturing company needs to know whether to make in-house or buy an injection molding machine for its new fax machine production. The company expects to produce 9,000 units per year. The following estimates have been made:
$\begin{array}{|l|c|c|}\hline & \text { Make } & \text { Buy } \\\hline \text { Fixed cost per year } & \$ 9,000 & \$ 0 \\\hline \text { Variable cost per part } & \$ 6.45 & \$ 7.20 \\\hline\end{array}$
a.What is the annual cost to make an injection molding machine?
b.What is the annual cost to buy an injection molding machine?
c.At what volume are they indifferent regarding the decision to make or buy?

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Definitions:

Geographic Location

The specific physical position of something on Earth's surface, often defined by coordinates of latitude and longitude.

Weberian Perspective

A sociological approach that emphasizes understanding society from the viewpoint of the individual and how individual actions contribute to the larger structure of society, based on the theories of Max Weber.

Social Status

The position or rank of a person or group within the social hierarchy, which can be determined by various factors such as wealth, occupation, education, or family lineage.

Status Group

A group of people who share similar social status, lifestyles, world views, occupations, and standards of living.