Stan Fawcett’s company is considering producing agear assembly that it now purchases from Salt Lake Supply, Inc.Salt Lake Supply charges $4 per unit, with a minimum order of3,000 units. Stan estimates that it will cost $15,000 to set up theprocess and then $1.82 per unit for labor and materials.a) Draw a graph illustrating the crossover (or indifference)point.b) Determine the number of units where either choice has thesame cost.
Stan Fawcett’s company is considering producing agear assembly that it now purchases from Salt Lake Supply, Inc.Salt Lake Supply charges $4 per unit, with a minimum order of3,000 units. Stan estimates that it will cost $15,000 to set up theprocess and then $1.82 per unit for labor and materials.a) Draw a graph illustrating the crossover (or indifference)point.b) Determine the number of units where either choice has thesame cost.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stan Fawcett’s company is considering producing a
gear assembly that it now purchases from Salt Lake Supply, Inc.
Salt Lake Supply charges $4 per unit, with a minimum order of
3,000 units. Stan estimates that it will cost $15,000 to set up the
process and then $1.82 per unit for labor and materials.
a) Draw a graph illustrating the crossover (or indifference)
point.
b) Determine the number of units where either choice has the
same cost.
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