A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $8 each or to produce them in-house. Either of two processes could be used for in-house production; Process A would have an annual fixed cost of $175,000 and a variable cost of $7 per unit, and Process B would have an annual fixed cost of $195,000 and a variable cost of $6 per unit. Determine the range of annual volume for which each of the alternatives would be best. (Round your first answer to the nearest whole number. Include the indifference value itself in this answer. Enter your last answer as a whole number). |
For annual volumes of or less, (Click to select)production in house at $4 per unitpurchase from the vendorproduction in house at $5 per unit is best. For annual volumes at or above that amount, it is best to produce in house at a cost of $ per unit. |
A firm plans to begin production of a new small appliance. The manager must decide whether...
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $9 each or to produce them in-house. Either of two processes could be used for in-house production; Process A would have an annual fixed cost of $170,000 and a variable cost of $5 per unit, and Process B would have an annual fixed cost of $190,000 and a variable cost of $4 per...
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor for $7 each or to produce them in-house. Either of two processes could be used for the in-house production. Production Option One would have an annual fixed cost of $160,000 and a variable cost of $5 per unit. Production Option Two would have an annual fixed cost of $190,000 and a variable cost of...
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor for $6.50 each or to produce them in house. There are two in house options. Option 1 would have an annual fixed cost of $161000 and a variable cost of $5.80. Option 2 would have an annual fixed cost of $193000 and a variable cost of $3.90. Calculate the maximum quantity that would have...
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor for $6.70 each or to produce them in house. There are two in house options. Option 1 would have an annual fixed cost of $161000 and a variable cost of $5.90. Option 2 would have an annual fixed cost of $194000 and a variable cost of $4.10. Calculate the maximum quantity that would have...
A firm plans to begin production of a new small appliance. The manager has three options: Option 1: purchase the motors for the appliance from a vendor at $9 each Option 2: produce them in house using technology A with an annual fixed cost of $40000 and a variable cost of $4 per unit Option 3: produce them in house using technology B with an annual fixed cost of $125000 and a variable cost of $3 per unit The range...
Options for click to select are (Process A, Process B, and Purchase from vendor) 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...
a firm plans to begin production of a new small appliance. The manager has three options: Option 1: purchase the motors for the appliance from a vendor at $6 each Option 2: produce them in house using technology A with an annual fixed cost of $15000 and a variable cost of $4 per unit; or Option 3: produce them in house using technology B with an annual fixed cost of $20000 ad a variable cost of $2 per unit. The...
A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two processes. One would entail a variable cost of $17 per unit and an annual fixed cost of $200,000; the other would entail a variable cost of $14 per unit and an annual fixed cost of $240,000. Three vendors are willing to provide the part. Vendor A has a price of $20 per unit for any...
The division manager of an appliance manufacturing firm must decide on the daily production level 9 for an electric mixer. The plant manager where these mixers are produced has reported that daily total fixed costs are $750, while average variable costs (in dollars) are approximately v = 75 - .049 +.0000897 where q is the production level per day. The marketing director reports that the mixers can be sold to wholesale distributors for a price of p = 85-.039 (in...
A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $181 in either case. Omaha Kansas City Annual fixed costs...