Question

Queen Inc. has the option to make or buy one of its component parts. The annual requirement is 20,000 units. A supplier is able to supply the parts for $11 per piece. The firm estimates that it costs $ 600 to prepare the contract with the supplier. To make the part in-house, the firm must invest $50,000 in capital equipment and estimates that the parts cost $ 9 per piece. Complete the table below. Important! Enter all responses as whole numbers with a comma as needed (#,###).

Should the firm make or buy? (Enter Make or Buy)
What is the break-even quantity? (Enter as ##,### or #,###)
What is the total cost at the break-even point? (Enter as ###,### or ##,###)	$
Assume instead that the annual requirement is 27,000; calculate the total cost for both options and the cost savings for choosing the cheaper option.
Total cost for making at 27,000 units: (Enter as ###,### or ##,###)	$
Total cost for buying at 27,000 units: (Enter as ###,### or ##,###)	$
Cost savings from choosing the cheaper option: (Enter as ##,### or #,###)	$

Answer 1