Make or Buy; Continuation of Problem 9-28 (Chapter 9) Calista Company manufactures electronic equipment In 2009, it purchased the special switches used in each of its products from an outside supplier. The supplier charged Calista $2 per switch. Calista’s CEO considered purchasing either machine X or machine Y so the company could manufacture its own switches. The CEO decided at the beginning of 2010 to purchase Machine X, based on the following data:
| Machine X | Machine Y |
Annual fixed cost | $135,000 | $204,000 |
Variable cost per switch | 0.65 | 0.30 |
Required
1. For machine X, what is the indifference point between purchasing the machine and purchasing from the outside vendor?
2. At what volume level should Calista consider purchasing Machine Y?
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