A firm currently makes a component, and requires 25,000 of them for the coming year's production. Another supplier has offered the part at a delivered price of $4.50 per unit. It would cost $2,500 to check purchased units for quality. Product costs per unit for the past year were $3.80 variable and $2 fixed based on 25,000 units. If the component was bought, fixed overhead would be reduced by $7,500, the cost of leasing specialised equipment. The space vacated by the equipment can be rented for $5,500 for the year. 

At what level of units of production is the firm indifferent between making and buying?

Answer rating: 100% (QA)

Okay lets think through this stepbystep If the firm makes the components itself Va... View the full answer