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Sinbo Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A high-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Sinbo can make the component in-house and have it readily available at a material cost of $3 per unit if equipment costing $155,000 is purchased. Labor and other operating costs are estimated to be $45,000 per year over the study period of 5 years. Salvage is estimated at 10% of the first cost, and the interest rate is 10% per year. Which one of the following values is closest to the break-even quantity? Select one: O a. 3,789 b. 3,158 c. 6,341 d. 4,404 e. 11,160

Sinbo Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A high-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Sinbo can make the component in-house and have it readily available at a material cost of $3 per unit if equipment costing $155,000 is purchased. Labor and other operating costs are estimated to be $45,000 per year over the study period of 5 years. Salvage is estimated at 10% of the first cost, and the interest rate is 10% per year. Which one of the following values is closest to the break-even quantity? Select one: O a. 3,789 b. 3,158 c. 6,341 d. 4,404 e. 11,160

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 7E: Make-or-buy decision Somerset Computer Company has been purchasing carrying cases for its portable...
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Sinbo Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A high-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Sinbo can make the component in-house and have it readily available at a material cost of $3 per unit if equipment costing $155,000 is purchased. Labor and other operating costs are estimated to be $45,000 per year over the study period of 5 years. Salvage is estimated at 10% of the first cost, and the interest rate is 10% per year. Which one of the following values is closest to the break-even quantity? Select one: а. 3,789 b. 3,158 с. 6,341 d. 4,404 e. 11,160
Transcribed Image Text:Sinbo Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A high-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Sinbo can make the component in-house and have it readily available at a material cost of $3 per unit if equipment costing $155,000 is purchased. Labor and other operating costs are estimated to be $45,000 per year over the study period of 5 years. Salvage is estimated at 10% of the first cost, and the interest rate is 10% per year. Which one of the following values is closest to the break-even quantity? Select one: а. 3,789 b. 3,158 с. 6,341 d. 4,404 e. 11,160
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