If the requirement is 4500 units is it more cost-effective, Accounting Basics

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If the requirement is 4500 units is it more cost-effective

Question: You are given the following information:

Cost Make Option Buy Option

Fixed cost $25,000 $3,000

Variable cost $8 $12

a. Find the break-even quantity and the total cost at the break-even point.

b. If the requirement is 4,500 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option?

c. If the requirement is 6,000 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option?

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Accounting Basics: If the requirement is 4500 units is it more cost-effective

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Accounting Basics: If the requirement is 4500 units is it more cost-effective

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