ou are asked to recommend whether a firm should make or purchase product A. The following are data concerning the two options. For the purchase option, the firm can buy product A at $18 per unit. For the make option, the firm an produce product A based on the following cost estimation data. The firm has to pay a weekly rental payment of $9,600 for the production facility. With the use of this facility, the firm also has to hire five operators to help make roduct A. Each operator works eight hours per day, five days per week at the rate of $8 per hour. In other words, the rental and labor expenses are fixed costs. The material cost for the make option is $14 per unit of product A Find a weekly amount of product A that provides the breakeven point for the firm. The breakeven point in this problem indicates the firm's indifference between purchasing or making product A . If the firm estimates the sale of product A to be 3,600 units per week, should it make or purchase product A? 1. A weekly amount of product A that provides the breakeven point for the firm is units per week. (Round to the nearest whole number.) p. If the firm makes 3,600 units per week, the total cost will be S. (Round to the nearest dollar.) f the firm purchases 3,600 units per week, the total cost will be S. (Round to the nearest dollar.) The firm should product A
ou are asked to recommend whether a firm should make or purchase product A. The following are data concerning the two options. For the purchase option, the firm can buy product A at $18 per unit. For the make option, the firm an produce product A based on the following cost estimation data. The firm has to pay a weekly rental payment of $9,600 for the production facility. With the use of this facility, the firm also has to hire five operators to help make roduct A. Each operator works eight hours per day, five days per week at the rate of $8 per hour. In other words, the rental and labor expenses are fixed costs. The material cost for the make option is $14 per unit of product A Find a weekly amount of product A that provides the breakeven point for the firm. The breakeven point in this problem indicates the firm's indifference between purchasing or making product A . If the firm estimates the sale of product A to be 3,600 units per week, should it make or purchase product A? 1. A weekly amount of product A that provides the breakeven point for the firm is units per week. (Round to the nearest whole number.) p. If the firm makes 3,600 units per week, the total cost will be S. (Round to the nearest dollar.) f the firm purchases 3,600 units per week, the total cost will be S. (Round to the nearest dollar.) The firm should product A
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:"ou are asked to recommend whether a firm should make or purchase product A. The following are data concerning the two options. For the purchase option, the firm can buy product A at $18 per unit. For the make option, the firm
an produce product A based on the following cost estimation data. The firm has to pay a weekly rental payment of $9,600 for the production facility. With the use of this facility, the firm also has to hire five operators to help make
product A. Each operator works eight hours per day, five days per week at the rate of $8 per hour, In other words, the rental and labor expenses are fixed costs. The material cost for the make option is $14 per unit of product A.
. Find a weekly amount of product A that provides the breakeven point for the firm. The breakeven point in this problem indicates the firm's indifference between purchasing or making product A
p. If the firm estimates the sale of product A to be 3,600 units per week, should it make or purchase product A?
a. A weekly amount of product A that provides the breakeven point for the firm is units per week. (Round to the nearest whole number.)
b. If the firm makes 3,600 units per week, the total cost will be $. (Round to the nearest dollar.)
If the firm purchases 3,600 units per week, the total cost will be $. (Round to the nearest dollar.)
The firm should
product A
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