A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would ntail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A as a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. ) If selling price per unit is $45 what is the breakeven point. If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? Which Alternative would entail the highest profit?
A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would ntail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A as a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. ) If selling price per unit is $45 what is the breakeven point. If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? Which Alternative would entail the highest profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![2)
A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would
entail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A
has a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities.
a)
If selling price per unit is $45 what is the breakeven point.
b)
If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint?
c)
Which Alternative would entail the highest profit?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F28bb1667-4e4e-407e-a559-0161b37867c2%2Faa006088-d1d1-4548-9e0c-663556a84fe2%2Fw9x9sm_processed.png&w=3840&q=75)
Transcribed Image Text:2)
A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would
entail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A
has a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities.
a)
If selling price per unit is $45 what is the breakeven point.
b)
If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint?
c)
Which Alternative would entail the highest profit?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education