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3. Pamper Chef is deciding whether to outsource the production of a certain component that is included in all of its products
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Answer #1

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Cost of Making 12,000 Units:

Variable costs : 12,000 *$1.20 = $14,400

Fixed Costs : $20,000

Total costs : $14,400 + $20,000 = $34,400

Cost of Buying 12,000 Units:

Cost of purchase : 12,000 * $1 = $12,000

Savings if Pamper chef decide to Buy : $34,400 - $12,000 = $22,400

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