Scenario 12.1 You Currently Make a Part on Old Equipment at a at a Cost

question 25

Multiple Choice

Scenario 12.1
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year. The following table summarizes the details of this make versus buy decision.

-Use Scenario 12.1 to answer the question. What is the break even quantity between buying and making?

• A) 30,000 units per year
• B) 40,000 units per year
• C) 50,000 units per year
• D) 60,000 units per year

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Definitions:

Phrenology

Phrenology is an outdated and discredited theory that suggested the bumps on the skull could predict mental traits and character.

Assumptions

Accepted facts or statements taken as true without proof, often serving as the foundation for further reasoning or argument.

ERP

Event-Related Potential; a measured brain response that is the direct result of a specific sensory, cognitive, or motor event.

Consciousness

A state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, and experiences.