A manager is in a dilemma whether to purchase boards for kitchen cabinets from a vendor at $6 each or to produce them in-house. For In-house production there are two processes the first option has annual fixed cost of $150,000 and variable cost of $4 per unit, while the other has annual fixed cost of $1 80,000 and variable cost of S4 per unit. Determine the volume that would be best for each of them.

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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A manager is in a dilemma whether to purchase boards for kitchen cabinets from a vendor at $6 each or to produce them in-house. For In-house production there are two processes the first option has annual fixed cost of $150,000 and variable cost of $4 per unit, while the other has annual fixed cost of $1 80,000 and variable cost of S4 per unit.

Determine the volume that would be best for each of them. 

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