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

question 16

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 does the company save for the year by selecting the low-cost option at an annual requirement of 40,000 units?

• A) $150,000
• B) $300,000
• C) $50,000
• D) $40,000

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Definitions:

Face-to-Face Meetings

In-person gatherings where participants interact directly, allowing for immediate feedback and non-verbal communication.

Troublemakers

Individuals who cause conflicts or problems within a group or organization.

Power Struggle

A situation where two or more parties compete for control or influence over others or situations.

Communication Effective

The ability to convey information to others successfully and efficiently. (Rephrased Definition)