Question

Q6.
(3 Mark)
Assume that a manufacturer can purchase a needed component from a supplier at a cost of
$9.50 per unit, or it can invest $60,000 in equipment and produce the item at a cost of $7.00 per
(a) Determine the quantity for which total costs are equal for the make and buy
alternatives.
(b) What is the minimum cost alternative if 15,000 units are required? What is the
minimum cost?
(c) If the number of units required of the component is close to trhe break eve
what factors might might influence the final decision to make or buy?
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Answer 1

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