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1. You are given the following information: Make Option Buy Option $25,000 $3,000 $12 Costs Fixed Cost Variable Cost $8 1. Find the break-even quantity and the total cost at the break-even point. 2. 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? 3. 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

1. You are given the following information: Make Option Buy Option $25,000 $3,000 $12 Costs Fixed Cost Variable Cost $8 1. Find the break-even quantity and the total cost at the break-even point. 2. 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? 3. 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. You are given the following information: Make Option Buy Option $25,000 $3,000 $12 Costs Fixed Cost Variable Cost $8 1. Find the break-even quantity and the total cost at the break-even point. 2. 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? 3. 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
Transcribed Image Text:1. You are given the following information: Make Option Buy Option $25,000 $3,000 $12 Costs Fixed Cost Variable Cost $8 1. Find the break-even quantity and the total cost at the break-even point. 2. 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? 3. 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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