Question

A firm plans to begin production of a new appliance, and must decide whether to purchase the motors for the appliance from a vendor at $7 each or to produce them in-house. In-house Process A would have an annual fixed cost of $160,000 and a variable cost of $5 per unit, and in-house Process B would have an annual fixed cost of $190,000 and a variable cost of $4 per unit. The management already knew Process A would never cost the least and has eliminated Process A. Determine the range of annual volume for which purchase from the Vendor would be best and the volume range for which in-house Process B would be best. (Round your first answer to the nearest whole number. Include the indifference value itself in this answer.) 7 is best. For annual volumes above that amount For annual volume less than Click to select) v is best.

Options for click to select are (Process A, Process B, and Purchase from vendor)

Answer 1

vla break eve 24 160,00 7: 1600מ d-8o,00oo 3 ס6333.3 cOst option Up70pma Gian af 6334, Moto