Question: A cherry hill company must decide if it will make or buy an item it needs. The company can make the item for $20 per

A cherry hill company must decide if it will make or buy an item it needs. The company can make the item for $20 per unit but it must invest $25,000 in tooling to achieve that capability. An outside supplier has quoted a total price of $25 per unit to the supply quantity required.

What is the break even quantity when considering the make or buy decision? Which alternative should be selected if annual requirements are 10,000 units.

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