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

question 44

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. For what range of output would you prefer to make?

• A) 40,001 or more units per year
• B) 35,001 - 40,000 units per year
• C) 30,001 to 35,000 units per year
• D) 0 - 30,000 units per year

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Definitions:

Lead Away

To guide or direct someone or something away from a certain place.

Middle

The central point or part of something.

Impulses

Electrical or chemical signals transmitted through neurons that facilitate communication within the brain and between the brain and the rest of the body.

Center

A point of convergence or a central focal point.