A firm plans to begin production of a new small appliance The manager must decide whether to purchase

QUESTION:

A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $ 7 each or to produce them in-house. Either of two processes could be used for in-house production; one would have an annual fixed cost of $ 160,000 and a variable cost of $ 5 per unit, and the other would have an annual fixed cost of $ 190,000 and a variable cost of $ 4 per unit. Determine the range of annual volume for which each of the alternatives would be best?


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