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

Question 65

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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:
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:   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?
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?

Correct Answer:

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a.Cost to make: $8,000 + $5.45...

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