A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would ntail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A as a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. ) If selling price per unit is $45 what is the breakeven point. If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? Which Alternative would entail the highest profit?

A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would ntail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A as a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. ) If selling price per unit is $45 what is the breakeven point. If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? Which Alternative would entail the highest profit?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1PB: Variety Artisans has a bottleneck in their production that occurs within the engraving department....

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