1) Differential analysis
Make | Buy | |
Variable manufacturing cost (3900*11.25) | 43875 | |
Fixed cost | 6831 | |
Purchase cost (3900*14.38) | 56082 | |
Total relevant cost | 50706 | 56082 |
it will save = 56082-50706 = 5376
2) Indifferent point
Manufacturing cost = Buying cost
11.25X+6831 = 14.38X
-3.13X = -6831
X(Unit) = 2182 Units
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