Question No. 1. A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below: For in-house manufacturing, using this information, determine the break-even quantity for which the firm would be indifferent between manufacturing the part in-house or outsourcing it. Given: Annual fixed cost = P2,250,000.00 Variable cost per part = P7,000.00 For purchasing from supplier Purchase price per part = P8,000.00 Question No. 2. In relation to the previous question answer the following: If demand is forecast to be greater than 2,500 parts, should the firm make the part in-house or purchase it from a supplier? The marketing department forecasts that the upcoming year’s demand will be 2,500 units. A new supplier offers to make parts for P7,500.00 each. Should the company accept the offer? What is the maximum price per part the manufacturer should be willing to pay to the supplier if the forecast is 1,500 parts, using the information in the previous question
Question No. 1. A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below: For in-house manufacturing, using this information, determine the break-even quantity for which the firm would be indifferent between manufacturing the part in-house or outsourcing it.
Given:
Annual fixed cost = P2,250,000.00
Variable cost per part = P7,000.00
For purchasing from supplier Purchase price per part = P8,000.00
Question No. 2. In relation to the previous question answer the following:
If demand is
The marketing department forecasts that the upcoming year’s demand will be 2,500 units. A new supplier offers to make parts for P7,500.00 each. Should the company accept the offer?
What is the maximum price per part the manufacturer should be willing to pay to the supplier if the forecast is 1,500 parts, using the information in the previous question
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