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

question 2

Essay

A manufacturing company needs to know whether to make in-house or buy a roller gear assembly for its new fax machine production. The company expects to produce 9,000 units per year. The following estimates have been made:
$\begin{array}{lrr} &\underline{\text {Make}}& \underline{\text {Buy }}\\ \text {Fixed cost per year } &\$8,000&\$0\\ \text { Variable cost per part } &\$5.45&\$6.93\\\end{array}$

a. What is the annual cost to make the roller gear assembly in-house?
b. What is the annual cost to buy the roller gear assembly?
c. At what volume are they indifferent regarding the decision to make or buy?

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Definitions:

Moderate Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, but to a lesser degree than severe depression.

Severe Depression

A mental health condition characterized by deep sadness, loss of interest in activities, and other symptoms that impair daily functioning.

Canadian Psychiatric Association

A professional association in Canada that represents psychiatrists and advocates for the provision of high-quality mental health services.

First-Line Treatment

The initial, preferred method of treatment for a disease or condition, typically based on clinical evidence for its effectiveness.