Business, 14.10.2020 01:01, robert7248

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 volume up to its maximum capacity of 30,000 units. Vendor B has a price of $22 per unit for a demand of less than 1,000 units, and $18 per unit for larger quantities. Vendor C offers a price of $21 per unit for the first 1,000 units, and $19 per unit for additional units.

a. If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint? For 20,000 units, which alternative would be best? (Omit the "$" sign in your response.)

TC for 10,000 units TC for 20,000 units
Int. 1:$ Int.1:$
Int.2:$ Int 2:$
Vend A$ Vend A$
Vend B$ Vend B$
Vend C$ Vend C$
_ is the best from a cost standpoint_ is the best from a cost standpoint
b. Determine the range for which each alternative is best.
TC for 10,000 units TC for 20,000 units
Int. 1:$ Int.1:$
Int.2:$ Int 2:$
Vend A$ Vend A$
Vend B$ Vend B$
Vend C$ Vend C$
_ is the best from a cost standpoint_ is the best from a cost standpoint

Answers: 3

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A manager is trying to decide whether to purchase a certain part or to have it produced internally....