Chris Sutter, the production manager of Satellite Computers, insists that the DVD drives used in the company’s upper-end computers be outsourced because they can be purchased from a supplier at a lower cost per unit than the company is presently incurring to produce the drives. Jane Meyers, his assistant, insists that if sales growth continues at the current levels, the company will be able to produce the drives in the near future at a lower cost because of the company’s predominately fixed cost structure. Does Ms. Meyers have a legitimate argument? Explain.
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