Case

Gaba Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1600 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 250 to 750 units. Management wonders whether it is time to make the component in-house rather than to continue buying it from the supplier. Fixed costs would increase by about $38,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,000 per unit, and labor costs would be $250 per unit produced.

a. Should Gaba make rather than buy?

Don't use plagiarized sources. Get Your Custom Essay on
Case
Just from $13/Page
Order Essay

b. What is the break-even quantity?

Place Order
Grab A 14% Discount on This Paper
Pages (550 words)
Approximate price: -
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Try it now!

Grab A 14% Discount on This Paper

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.