A U.S. motorcycle manufacturer has the option of either making the gas tank in their newly designed motorcycle, or subcontracting it to a manufacturer from Sinagpore. The manufacturer expects to produce 1,000 units per year. Costs for the two options are:
$\begin{array}{|l|c|c|}
\hline \text { Source } & \text { Fixed Cost } & \text { Variable Cost } \
\hline \text { Make in-house } & \$ 15,000 & \$ 21.50 \
\hline \text { Buy from Singapore } & \$ 0 & \$ 29.00 \
\hline
\end{array}$
-The annual cost to outsource the manufacturing to Singapore is _____.
A) less than or equal to $30,000
B) more than $30,000 but less than or equal to $40,000
C) more than $40,000 but less than or equal to $50,000
D) more than $50,000 but less than or equal to $60,000

Question

A U.S. motorcycle manufacturer has the option of either making the gas tank in their newly designed motorcycle, or subcontracting it to a manufacturer from Sinagpore. The manufacturer expects to produce 1,000 units per year. Costs for the two options are:
 $\begin{array}{|l|c|c|}
\hline \text { Source } & \text { Fixed Cost } & \text { Variable Cost } \
\hline \text { Make in-house } & \$ 15,000 & \$ 21.50 \
\hline \text { Buy from Singapore } & \$ 0 & \$ 29.00 \
\hline
\end{array}$
-The annual cost to outsource the manufacturing to Singapore is _____.
A) less than or equal to $30,000
B) more than $30,000 but less than or equal to $40,000
C) more than $40,000 but less than or equal to $50,000
D) more than $50,000 but less than or equal to $60,000

Quizplus · Accepted Answer

The annual cost to outsource the manufacturing to Singapore is $29,000 (1,000 units x $29.00 per unit).

A US Motorcycle Manufacturer Has the Option of Either Making the the Gas